Industry giants Harvey Norman and JB Hi-Fi are the favourites tipped to purchase collapsed retailer Clive Peeters as administrators attempt to piece together the circumstances leading to the company’s demise.
The speculation comes as a spokesperson for administrators McGrath Nicole said customer orders paid in full will be honoured, but products on lay-by and in other states of finance are under “urgent review”. An outcome is expected to be announced on Monday.
The business was formally placed into the hands of receivers PPB this morning, the spokesperson confirmed.
PPB has appointed Phil Carter and Daniel Bryant as receivers and managers, it said in a statement, with the firm also confirming that Clive Peeters’ operations will continue as normal.
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“Clive Peeters continues to operate on a “business as usual” basis under our control as receivers and managers. We intend to stabilise the business as a matter of urgency and will be in contact with key stakeholders in the near future,” Carter said.
Administrators Colin Nicol, Keith Crawford and Matthew Caddy announced yesterday the company had collapsed with about $160 million of debt. Chief executive Greg Smith revealed just weeks ago that the company had posted an un-audited loss of $4.5 million for the three months ending March and also said sales in April had fallen further.
The administrators will attempt to save the business either through a restructure or sale.
Retail Doctor chief executive Brian Walker says industry giants JB Hi-Fi and Harvey Norman will certainly be considering a purchase.
“I think those two chains are really the standout candidates. But it’ll also be interesting to see if there are any offshore valuers who might be going into the space, to see if they value the stronger performing stores. You’d have to say that Harvey Norman would be looking though.”
Walker says adding Clive Peeters’ stores to an existing chain would be a solid move, given the companies all operate within similar sectors.
“It’s also hard to see what the administrators might do. They could look to close down struggling stores and then see what’s left, or they could see the entire business shut down.”
Walker also says he is surprised at how quickly the business deteriorated, and questions whether internal controls could have been stronger.
“You have to feel for the 1,300 staff there, because it’s a business that’s lost its way. The embezzlement issue always puzzled me from last year, because it makes me wonder about all of their internal controls.”
Walker refers to a situation last year during which a Clive Peeters payroll officer allegedly stole millions from the company and used the funds to invest in properties. The company said it recouped most of the money, but Walker says the issue was indicative of other problems.
“The company clearly did not move with the times. I was speaking at a retailer’s conference in New Zealand, and another retailer in that industry spoke and was talking about cost control and a number of traditional retail methods… they clearly did not move with the times.”
Another retail expert, who wished to remain anonymous, said Clive Peeters wasn’t a well-run business, and survived on limited capital, leaving it little room to cope with dramatic drop in sales.
Administrators said yesterday they were aware of the impact of the company’s collapse, and would hopefully work out a solution.
“We are mindful that many stakeholders will be affected by the appointment of voluntary administrators to Clive Peeters, including employees, suppliers and other creditors, customers and shareholders,” Nicol said in a statement.
“It is hoped that the business can be stabilised and can continue to trade in one form or another beyond this administration. In the circumstances, this would represent the best outcome for all parties.”
A first meeting of creditors will take place no later than May 28.