Sheet pulled out under Covers

 

SYDNEY: The impact of the rising Australian dollar, sales declines during the global financial crisis and late supplier deliveries were among the factors that pushed stalwart fashion label Covers into voluntary administration.

As exclusively reported on www.ragtrader.com.au, the Australian womenswear label owned by Marilyn Said and Barry Taffs appointed voluntary administrators on December 21, 2010. Documents lodged with the Australian Securities and Investments Commission (ASIC) on January 7 revealed employee entitlements stood in excess of $600,000, of which approximately $267,000 was owed in superannuation.

Other creditors of Covers Designs include Taffs' mother, Pearl Taffs ($250,000), logistics firm Toyota Tsusho ($124,812), Chief Planner Garment ($60,000), Merry & Sew ($9000), Sydney-based wholesaler Montgomery Textile ($5620) and local manufacturer Kapini Holdings ($5148).

According to the January 7 report, factors contributing to the collapse of Covers included the company's history of using letters of credit to pay for goods from international suppliers. These were “adversely impacted by the rise in the Australian dollar” and Covers had been relying on family funding to maintain operations since February 2009.

Also taking a toll on the company was a 15 per cent decrease in sales throughout the GFC and a nine-week delay in 2010 stock deliveries due to a Chinese supplier’s staffing problem.

Finally, “the company was unable to reduce the number of casual employees, in line with sales reductions, due to required staff numbers per the David Jones concessions agreement”.

Documents lodged with ASIC reveal Said resigned from her role as director of Covers Designs on December 13, just over one week before administrators were called in.

Administrators reported the timing of the closure of Covers’ retail stores would depend on each store’s performance.

A comprehensive report into Covers' assets was delivered to all creditors in late January.
Covers was founded in 1978 and enjoyed a high profile in Australia's fashion industry in the 1980s. The company operated its own retail stores, was carried by David Jones and was also stocked by independent boutiques including Posh (NSW) and Wessons Stores (Victoria).

Taffs did not respond to Ragtrader's requests for comment by the time of press.

Erin O'Loughlin