G-Star Raw: 57 stores closed and 200 jobs lost as no buyer found for collapsed chain

G-Star-Raw-store

Denim fashion chain G-Star Raw has disappeared from Australian shopping centres, after a buyer was not found for the collapsed retailer. 

The Australian arm of G-Star Raw fell into administration in May, with administrators Justin Walsh, Stewart McCallum and Sam Freeman from Ernst & Young overseeing a sale campaign for the chain’s 57 stores in the time since. 

However, they said on Monday the sale campaign for the “globally recognised brand” was not successful. 

All of the G-Star Raw stores in Australia have now closed, and about 200 jobs have been lost. 

This was the second time the fashion retailer’s Australian arm had gone into administration, after the brand also collapsed back in 2015

“The fact that no party was able to buy the business reflects the high level of uncertainty regarding the future prospects for the retail sector in Australia,” administrators said in a statement, according to the ABC

G-Star Raw was founded in the Netherlands in 1989 and became known for its range of raw denim products. It continues to operate in other countries. 

When EY administrators were appointed to the Australian business in May, they said the company’s major creditors were commercial landlords.

“Traditional retailers were already facing business challenges before COVID-19,” said administrator Justin Walsh at the time. 

“COVID-19 has certainly increased those pressures.”

While some e-commerce operators, such as Kogan, have seen sales skyrocket during the coronavirus lockdowns, the pressure on traditional brick-and-mortar retailers has only intensified, particularly in Victoria where thousands of retailers are currently not able to open their shop doors

This has led to growing concerns about what will happen when government stimulus measures and rent moratoriums are scaled back in September, and temporary changes to insolvency laws are due to come to an end. 

In July, CreditorWatch released data showing there was a 20% decline in the number of small and medium businesses entering administration in May and June, and a 50% drop compared to June 2019. 

At the same time, court actions against companies were also down, as were payment defaults.

However, significant increases in payment delays showed businesses were struggling to pay their invoices, said the credit reporting agency. 

Payments were overdue by an average of 49 days across all sectors in June, which represents a 342% increase on 2019 figures. The increase was even higher in retail at 367%.

“It’s clear that trouble is brewing and that businesses are struggling with significant cashflow issues,” said CreditorWarch chief executive Patrick Coghlan. 

Coghlan predicted that after September, insolvencies may increase, as there will be “a substantial number of ‘zombie businesses’ … kept artificially afloat”.

“Government stimulus packages like JobKeeper, JobSeeker, mortgage holidays and the much-needed safe harbour changes have provided businesses with a buffer of protection,” he said last month.

“Until now, the priority has been to keep as many businesses as possible above water.”

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