Retail chain Howards Storage World will emerge from voluntary administration, with administrators Deloitte securing a sale of the business and its franchise network to an unnamed buyer.
The business was placed into the hands of external managers in late 2016, with Vaughan Strawbridge and David Lombe from Deloitte appointed to manage the administration of four entities in the Howards Storage World group in early December. The business continued to trade throughout the voluntary administration process.
At the time, the group was operating 29 company-owned retail outlets in New South Wales, Queensland, South Australia and Victoria, while also wholesaling goods to a network of 30 franchised Howards Storage World (HSW) stores, of which it is the franchisor.
Deloitte said in a statement this morning the company-owned stores and the franchise network have been sold to “an experienced retailer with both international and local retail and franchisee experience”.
The identity of the buyer and the terms of the sale are confidential, however, Deloitte said the transaction includes 46 stores. This represents 80% of the group’s store network and means 160 jobs have been retained, according to Deloitte.
“The HSW Group has been operating in a challenging market for some time, characterised by the failure of a number of established players in the retail sector due to ongoing pressures from deteriorating sales and margins in a highly competitive environment,” said administrator David Lombe.
“A wide-ranging sale of business campaign was launched on our appointment, and we have been right-sizing the business for sale since. Achieving a sale in the current retail environment is an outstanding result and is directly attributable to the restructuring undertaken in the Howards business.
“In the space of two months, we have had to implement a number of restructuring strategies to help turn the HSW Group around and into a viable business, and able to continue to operate most of its own company stores, and to provide support to its franchisees.”
Lombe paid tribute to the business’s employees, suppliers, landlords and franchisees, and said the sale “demonstrates the strength of the brand and its niche offering”.
Howards Storage World was founded in Sydney in the 1970s with a single store called Stack and Store. The first franchised store opened in 1998.
A “tough” retail environment
Speaking to SmartCompany, Lombe revealed Deloitte initially heard from between 120 and 130 parties who were interested in the Howards Storage World brand, with approximately 30 parties agreeing to sign confidentiality agreements and five eventually making indicative offers for the business. The administrators ultimately received four binding offers to acquire the group.
While Lombe says it is common to end up with a handful of interested buyers in a sale campaign like this one, he was somewhat surprised at the level of interest in the market given the “difficult” environment being faced by many retailers.
“It is always good to sell a business as a going concern because the business continues, employees have jobs, and there are opportunities going forward with better funding,” he says.
Lombe says many people both inside and outside of the retail sector are observing the tough conditions currently being faced by businesses, and while online retailing and the ongoing arrival of international players are putting pressure on local sellers, he says there are many factors at play.
The lesson for business owners, says Lombe, is to understand that “retail is detail”.
“At the end of the day, you can’t afford to have a third of your stores underperforming,” he says.
“You need to know what’s happening across the chain and you need to take action progressively.
“One of the problems that often occurs is that a business has 40 stores that are not performing, but that has developed over five years. Maybe addressing it progressively would be a better answer.
“You have to be constantly looking and restructuring,” he adds.