Australian retailers continue to face uncertain headwinds – with May traditionally one of the worst months for external administrations, according to national insolvency specialist Jirsch Sutherland.
Jirsch Sutherland Partner Amanda Young said fallout rates are highest during this period.
“We started the year with a number of high profile brands such as Maggie T and Zachary the Label entering into administration and, more recently, Esprit announcing it is closing all of its Australian stores and then yesterday fashion label Metalicus going into voluntary administration.
“Common factors that may cause financial distress for a retailer include a lack of systems and processes, no track record, an absence of effective marketing, market saturation, and location – or lack thereof.”
The number of retail trade companies entering external administration in January and February 2018 was 20% higher than that of the previous year.
“May was the worst month for this sector in both 2016 and 2017, and 2018 already has a number of casualties,” Young said.
“Our experience is that traditional bricks and mortar operations continue to face major challenges – as evidenced by Metalicus and Esprit. They’re being slammed by high rents, staff costs and the growing competition from online stores, and that’s exacerbated by other key contributors such as obsolete stock issues and poor record keeping.”