Dimmeys sold to Cool Breeze – administrator speaks out on iconic chain’s turnaround
Wednesday, April 9, 2014/
Retail’s a tough game, and within retail, perhaps nothing is tougher than the discount sector.
When iconic discount chain Dimmeys collapsed into administration in January, its administrators were hopeful a turnaround was possible. But it is a difficult industry – success was far from assured. After selling it to startup Cool Breeze last month, administrator Richard Cauchi, from SV Partners, is glad he and his team found a buyer.
He describes Cool Breeze, who bought the chain for a sum he’s not at liberty to discuss, as a startup company established specifically for the purpose of purchasing Dimmeys. “The people behind it are connected to the industry, and hopefully they can make a run of it,” he told SmartCompany.
When the business collapsed, around 470 employees worked for it. So far, around 80 have been let go after four stores were closed as part of the turnaround. Of those let go, Cauchi says half were casuals, a quarter worked part-time, and the rest worked full-time. The redundancies were spread out across New South Wales, Queensland and Tasmania.
Dimmeys collapsed when it was slapped with a $3 million fine after a Consumer Affairs Victoria investigation uncovered 14,000 unsafe items sold by the retailer. Not all the fine accrued to the business – some went to individuals within it. The portion of the penalty that did go to the business still needs to be met, Cauchi says.
As well as closing four stores, the administrators have tightened up the business, overhauling stock controls and “tightening up the general running of the business” to get it ready for sale.
In March, the Shop, Distributive and Allied Employees Union claimed a number Dimmeys employees had been terminated by letters in the mail.
One media report estimated 40% of staff had been sacked but Cauchi says these reports were inaccurate.
“It’s been fortunate that a majority of people have maintained their working positions. In all these things, you can’t have a win in every direction, but this is a good result,” he says.