The hardest call

Plummeting consumer spending has claimed its first high-profile fashion victim through Noni B's La Voca retail chain. It doesn't take a genius to deduce it's unlikely to be the last.

In a statement released to the market last week - and reported on Ragtrader Online - the womenswear retailer said the La Voca store concept was set for a radical "restructure" after posting an after-tax loss of $800,000 in the first half of fiscal 2008.

The 'restructure' - surely the dreaded word of choice for anyone who earns a crust from working in the volatile TCF sector - will result in half the 19 La Voca stores being rebranded as Noni B.

Subject to lessors' approval, the remaining leases will be relinquished with the company preferring to take the estimated $2 million hit of closing and rebranding the stores rather than continuing to flog what has ultimately proven a dead horse.

In attempting to put a brave face on what must have been a heavy disappointment, Noni B chairman Robert Critchley said La Voca had had to face a "significant headwind" with consumer demand weakening over the past year. The stores were taking much longer to make a profit that the group had anticipated, he argued, and this was unlikely to change in the foreseeable future. "We've seen consumer demand weaken over the past two months and we see it getting tougher before it gets better," Kindl told Melbourne newspaper The Age.

But while it is no surprise anyone trying to flog clothes - particularly women's fashions - is doing it tough at the moment, it could be argued the business model behind La Voca meant it was never really competing on an even playing field.
The core Noni B brand is a highly profitable, debt-free business.

It knows and respects its core consumer and is comfortable with where is sits in the mostly suburban marketplace. However La Voca, was a different beast entirely. The chain, founded in August 1996, was originally set up to replace the listed group's Liz Jordan premium stores which ironically had been "cannablised" owing to the fact the range was also sold in Noni B stores.

The group's managing director Alan Kindl, whose family owns a 40 per cent stake in the company, said at the time La Voca was being set up to target a more affluent shopper than Liz Jordan. Kindl claimed the group was setting its sights on the "35-year-old woman who spends three times more on fashion than Noni B's traditional shopper".

In other words it was setting its sights on that market already sewn up by another well-known retailer, David Jones.
It takes someone with balls of steel to take on the majors at the best of times, but to do so without a clear brand positioning or point of difference is fraught with danger.

For my mind's eye there was never enough of a distinction between the Noni B and La Voca brands and price alone - without the corresponding quality - was never going to cut it within such a competitive environment.

While it could be argued two years is not a particularly long time to make a new business profitable, I commend the Noni B management team for making the decision to pull up sticks when they did.

There is simply no point in putting good money after bad, potentially putting a cumbersome earnings strain on the business' other arms.

By Tracey Porter