Women’s clothing retailer Brown Sugar collapses

Women’s clothing retailer Brown Sugar has collapsed, hurt by management changes over the past couple of years and adverse trading conditions, putting the jobs of its 220 employees at risk.

The joint voluntary administrators, Sal Algeri and Tim Norman of Deloitte Touche Tohmatsu, are seeking expressions of interest for the decades-old business.

Brown Sugar, whose first store was opened in the Melbourne suburb of Brighton in 1975, says its stores will remain open. The bulk of Brown Sugar’s stores are in Victoria, with two at discount DFO outlets. The company also does online sales.

Salaries and benefits for its 50 full-time and 170 part-time and casual employees will be honoured while the company continues to trade.

Administrators say the brand has “suffered as a result of successive management changes since 2009 and, despite the current management team working to restore the company’s trading position, adverse trading conditions and falling consumer sentiment have continued to hamper the company’s return to profitable trade.”

Algeri says Deloitte’s first priority was “to try and achieve the best possible outcome for all stakeholders – employees, creditors and customers.”

“All Brown Sugar stores will commence a stock clearance sale shortly while the voluntary administrators assess the company’s financial position and seek expressions of interest to purchase the retailer,” Algeri said in a statement.

According to its website, Brown Sugar presents a “smart and feminine fashion story for those that appreciate quality as well as style.”

“Brown Sugar is recognised for providing high levels of genuine and personalised customer service, and this will continue to be a high priority for the business both in-store and online,” it says.

A creditors’ meeting will be held on Friday, August 12.

Deloitte says lay-bys will be honoured only where holders pay the value of their outstanding balances by cash. Gift cards issued before Deloitte’s appointment will be redeemable for up to 50% of the value of the item.

Retail expert Brian Walker, the Retail Doctor, says strategy and point of difference are key issues for retailers, and problems at Brown Sugar were likely brewing for a year or two.

“Forty stores is a lot to go into administration,” Walker says.

He says when a company collapses, it’s worth looking at management and whether it had dramatically changed the company’s path, funding issues and at what point the business went south.

“Somewhere along the way they probably lost their point of difference,” Walker says.

“And it only takes a couple of bad seasons, and their customers leave them.”


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