Mobile phone and car audio retail chain Strathfield has been placed in voluntary administration following a disastrous Christmas trading period.
Strathfield’s board made the decision to appoint administrators Brian Silvia and Andrew Cummins of BRI Ferrier after a board meeting last night.
Strathfield has more than 75 outlets around Australia and a number of these are franchised. Last year the company closed around 20 unprofitable stores.
In a statement released to the Australian Stock Exchange, Strathfield said that substantial writedowns of goodwill, receivables and inventory values will result in a negative net asset and shareholder funds positions in the company’s accounts for the six months to 31 December, 2008.
“After due consideration of the company’s recent performance, including the less than satisfactory Christmas and post-Christmas trading results… and in particular the significant deterioration of the company’s working capital position and funding requirements…that have emerged following poor Christmas trading figures, the board has resolved to take decisive steps to restructure the Strathfield Group.”
But the Strathfield saga might not be completely over.
The company has held talks with its main secured financier, its largest shareholder (a company called Investments & Equities Pty Ltd, according to the 2008 annual report) and its largest trading partner (believed to be Optus) to get support for a plan to restructure the company and bring it out of administration via a deed of company arrangement.
“A strategic review of the business model and individual store performances suggests the shifting of the future focus towards a franchising business model across the national store footprint of the Company once a rationalisation process has been finalized,” says a statement from the company.
Strathfield says it aims to retain as many jobs as possible under the restructure, although some staff may be employed under new franchise agreements.
“Those who may leave the Group are expected to receive their entitlements in full,” the company said in its statement.
The administrators and Strathfield’s non-executive chairman Vaz Hovanessian were not available for comment.
Strathfield has been stuck firmly in the doldrums for several years. Since the middle of 2005 the company’s shares have hovered around 5c and a steady stream of management changes has been unable to turn the company’s fortunes around.
While Strathfield managed a small profit in 2007-08 after several years of losses, the last five months have seen five different chairman appointed as the company tried to turn its fortunes around through the acquisition of mobile phone distribution operation Clear Equipment Group.