Another retailer has bitten the dust. Australian Music Group Holdings, trading as the iconic Allans Billy Hyde brand, has been placed in receivership.
Rumours of the company’s demise were floating around in March, but joint managing director Tim Mason told SmartCompany at that time the company had received an injection of capital, debt was reduced, and the business was trading fine albeit in rough conditions.
The fact a business of this size and calibre – it owns 25% of the market – can be struck by the retail downturn demonstrates the strength of pessimistic consumer confidence but also the ramifications of offshore retail.
Ferrier Hodgson confirmed yesterday the company had been placed in receivership – and those same harsh retail conditions are to blame.
“Things are pretty rough in retail right now,” Ferrier Hodgson partner James Stewart told SmartCompany.
“The business had been recapitalised as far back as March, and the business was not travelling at levels the people in charge would have liked it to travel at. The stakeholders decided to call it a day.”
“Our intention is to seek a buyer for the business as soon as we possibly can.”
Tim Mason was also contacted by SmartCompany, but he was not available to comment prior to publication. He told SmartCompany in March the business was hit by harsh retail conditions saying, “There has been significant price deflation, and that’s affecting all of retail”.
“There’s also heavy web competition in some industries, and we can see what’s happening there.”
Ferrier Hodgson said as much yesterday.
“The group’s decline in performance was impacted by the decrease in consumer discretionary spending currently being felt by many Australian retailers.”
Allans Billy Hyde is a significant entity, employing 500 staff across 25 stores with four franchisees among those. It also manages a wholesale distribution importing business, trading as MusicLink and Intermusic, which supplies over 300 independent music retailers.
The chain has a long history. Allans Music began in the 1850s and opened its first store in Melbourne on Collins Street – it still maintains a presence in the CBD. Billy Hyde opened his own store in the 1960s, and both companies merged in July 2010.
That merger occurred after Brackenbury purchased Allans Music from Roland Corporation in 2005. The joint entity created co-branded stores.
Private equity firm Crescent Capital owned a majority stake in Australian Music Group, but it sold that investment last year. Reports suggest it took a loss of $50 million.
Earlier this year, offshore firm Revere Capital injected more funds into the business. However, it is also behind the move to place the company in receivership.
James Stewart says all stores are trading as normal, although gift vouchers won’t be redeemed.
“This business has a significant share of the market, and obviously has a long and relatively successful history and has hit on some hard times.”
The music business has been hit hard by the downturn in retail. While stores have ongoing business from professional musicians, many casual shoppers opt to keep their equipment for a few more years instead of upgrading to more expensive options.
But the bigger threat comes from overseas. Offshore sites such as America’s Guitar Centre have not only been shipping to Australia, but actively courting domestic shoppers. Sites even offer free shipping to Australia and will convert product into Australian currency.