Victoria Station and Kate Hill collapse into voluntary administration, as 350 staff face uncertain times
Wednesday, May 3, 2017/
Luggage retailer Victoria Station is the latest local retail chain to call in administrators, appointing SV Partners to the business on Tuesday.
Administrators have been appointed to four companies associated with the operation and assets of the business: Victoria Station Corporation Pty Ltd, Victoria Station Services Pty Ltd, Michael Hartz Pty Ltd and Peter Hartz Pty Ltd.
Administrator Michael Carrafa, executive director at SV Partners in Melbourne, says the group operates 64 stores across the country, 43 of which are branded Victoria Station. The other 21 stores trade under the name Kate Hill, the handbag imprint which Victoria Station also operates.
The company was founded by brothers Paul and Michael Raiter in Melbourne in 1990, and over the following two decades the business expanded into Sydney, Canberra, Adelaide, Perth and across Queensland. Paul and Michael Raiter remain directors of the companies.
Carrafa says that while no comment can be made at this stage on the scale of the company’s liabilities, administrators will be looking to keep stores open and maintain “business as usual” as expressions of interest are sought for the brands.
“We’ll be seeking expressions of interest and you never know what kinds of expressions of interest will come up,” Carrafa told SmartCompany.
“There were also some parties [the company] were in discussions with prior to our appointment.”
Carrafa says the factors that led to his appointment as administrator are not dissimilar to those faced by other operators in Australia’s challenging retail environment in recent times.
“Based on my discussions with the board, it has been tightening margins and all the standard type things… things like retail rents,” he says.
As administrators continue to gather information on the business ahead of a possible sale, hundreds of staff across Victoria Station and Kate Hill brands are facing uncertain times.
“Across the nation, including all stores and office and warehouse staff, the number of staff that has been given to me is about 350,” Carrafa says.
Administrators expect to publish callouts for expressions of interest in the business in the coming days.
The administration comes just a week after news that the local operations of Canadian retailer Kit and Ace will close as part of a global restructure. The Kit and Ace business employs 65 employees across the country, most of whom are casuals.
Retail experts have told SmartCompany there is more pain to come for home-grown brands, with the spectre of Amazon just one of many pressures on traditional retailers at home.
RetailOasis strategist Pippa Kulmar says many brands are just now getting the “kick” they should have years ago to make themselves relevant in the face of low-cost international and online competitors.
“There’s a falling out that is long overdue… there are businesses that should have changed,” Kulmar says.
“I think a lot of businesses need a long overdue change and there’s an interesting theory, that whenever a sector hits 20% online, the offline stores start to struggle.”
Meanwhile, small businesses in particular should be aware many businesses are struggling to pay creditors across the country, with the average dollar value of payment defaults reported to credit reporting agency CreditorWatch continuing to climb in the first quarter of 2017.
CreditorWatch managing director Colin Porter says the risks a company will default on paying money owed can take a big toll on SMEs because smaller and “less critical” suppliers tend to be the first to miss out on getting paid.
“Struggling businesses are more likely to default on less critical suppliers and SMEs six months prior to them defaulting on a corporate or large business who is more equipped with the resources to take legal action against them,” Porter said in a statement.
SmartCompany contacted Victoria Station for comment and was directed to administrator SV Partners.