Iconic Adelaide retailer Le Cornu to close
Thursday, July 7, 2016/
An Adelaide furniture business that traces its history back to 1861 will close its doors for the final time in six months.
Le Cornu was originally founded as a cabinet making business in Adelaide in 1861 and since 2008, has been part of the stable of furniture brands owned by listed retail group Fantastic Holdings, along with Fantastic Furniture and Plush.
Fantastic Holdings informed the market yesterday it will close the Le Cornu store in Keswick in Adelaide over the next six months.
The company said the Keswick site, which it leases, has been for sale since the end of last year and “ likely disruption” caused to the business as a result of potential redevelopment of the site was a factor in the decision to close the business.
The Le Cornu store currently employs 95 people and Fantastic Holdings said in a statement it hopes to redeploy 25 of those employees.
The Le Cornu brand also operates in Darwin and Fantastic Holdings said this operation will continue.
Fantastic Holdings will incur a one-off charge of $9.1 million, including a cash charge of $2.5 million, as a result of the closure, which it said will allow it to focus on its “core brands”.
“Fantastic Holdings is committed to its strategy of investing in strong furniture brands and we believe that winding down the Le Cornu brand in Adelaide and investing further in our core brands in South Australia is the right strategic choice,” said retail group chief executive Debra Singh in the statement.
“It will enable us to best deliver a long term platform for growth that will be positive for our customers, our people and shareholders.”
The Le Cornu family owned and operated the business from 1861 and in 2008, the business was sold to Fantastic Holdings for $1.3 million.
Originally a cabinet making business, Le Cornu began wholesaling furniture in the 1920s and commenced direct sales to the public in 1954. In addition to the Keswick store, Le Cornu previously operated a retail store in North Adelaide, which was closed in 1989.
Fantastic Holdings said on Wednesday the Le Cornu has been profitable “for the past few years” but trading had deteriorated during the 2016 financial year and Le Cornu will book trading losses of approximately $4 million as a result.
Despite the losses, Fantastic Holdings said it expects the overall group’s earnings before interest and tax for the 2016 financial year to be 30% higher than the 2015 financial year.
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Brian Walker, chief executive of the Retail Doctor Group, told SmartCompany the scalability, or lack thereof, of the Le Cornu business would likely have been a “big driver” in Fantastic Holdings’ decision to close the Adelaide operations.
“Retail is about brand, scale and momentum,” Walker says.
“Ultimately it’s about getting your business to customers via as many touch-points as possible, with a consistent message and consistent operations, and that’s where the economies of scale lie.”
Walker says it’s likely the Le Cornu brand was not scalable or “at the very least, even if it was, it would have diverted attention and focus away from [Fantastic Holdings’] main brands”.
“It’s a more-than-100-year-old business that is closing but the other thing with retail is you’re either a big brand, scalable player or a very small niche player and those two things don’t live together,” Walker says.
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