National retailer Jeanswest collapses into administration
Wednesday, January 15, 2020/
National denim chain Jeanswest has collapsed into administration, becoming just the latest major retailer to fall on tough times in recent weeks.
KPMG Administrators’ Peter Gothard and James Stewart were appointed as voluntary administrators of Jeanswest Corporation Pty Ltd on Wednesday.
The business, which employs 988 people and has 146 stores across the country, is known for its denim products and maternity wear.
Jeanswest also has a number of international stores, including in New Zealand, which have not been affected by the Australian administration.
Administrators are now undertaking an “urgent analysis” of the retail chain with an eye on a possible restructure or sale.
“Jeanswest is an iconic Australian denim brand, well known in the leisure and casual wear market place,” Stewart said in a statement circulated Wednesday afternoon.
“Like many other retailers, the business has been challenged by current tough market conditions and pressure from online competition.
“The Administration provides an opportunity for Jeanswest to restructure so as to better respond to the challenging Australian retail market,” Stewart said.
Administrators are seeking urgent expressions of interest from parties interested in buying or investing in the Jeanswest business.
Established in 1972, Jeanswest is one of Australia’s most well-known retail brands, but its collapse is nothing new for an industry that’s become well acquainted with business failure in recent years.
National chains Harris Scarfe and Bardot appointed administrators late last year, capping off a decade defined by hundreds of retailers going bust.
Jeanswest is currently owned by the Hong-Kong-based Yeung family’s investment vehicle, HOWSEA Limited, which acquired the business as part of an HK$220 million ($41 million) deal with publicly-listed Glorious Sun Enterprises in 2017.
Glorious Sun chairman Charles Yeung and vice chairman Chun Fan Yeung were listed as directors of the new owners at the time of the purchase, according to public company filings which quietly disappeared at some stage on Wednesday night.
Other documents detailing the sale are still listed elsewhere on the company’s website, and via third party sources.
Glorious Sun signed a master supply agreement with the Yeung family’s company as part of the deal, which included an HK$170 million ($31 million) “sale loan” to be repaid to Glorious Sun with no interest, the filings detail.
The corporate structure of Jeanswest in Australia doesn’t appear to have been unraveled completely after the deal, insolvency notices published Thursday morning show Glorious Sun Australia has been put into administration alongside the main retail business.
By the time of the purchase Jeanswest had already been struggling financially for several years, booking a HK$80 million ($14 million) before tax loss for financial year 2016.
“The Target Group has seen substantial operating losses in two of the past three years,” Glorious Sun said in a statement when it sold the business in 2017.
“The Directors expect that turnaround of the Jeanswest brand name and business will entail deep level reforms and reinvestment in Jeanswest’s product design, market positioning and electronic platform, with additional resources in boosting its brand name and to bring new image to Jeanswest.
“The Directors believe that this will mean costly effort while optimal results will only be achieved in a long time span.”
That strategy was evidently unsuccessful.
This story was updated at 12:10PM January 16.
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