There only appears to be more gloom and doom for Australia’s retail sector, with clothing and footwear retailer Colorado being the latest chain to fall victim to weak consumer spending.
There only appears to be more gloom and doom for Australia’s retail sector, with clothing and footwear retailer Colorado being the latest chain to fall victim to weak consumer spending.
Colorado will close 140 underperforming stores across Australia and New Zealand, 13 of which are in WA. This will result in the loss of 1,000 jobs nationally and 106 in WA.
These closures reflect the downturn in consumer sentiment and add to recent closures by kitchenware chain House, clothing retailer Ed Harry and REDgroup’s Borders and Angus & Robertson bookstores.
Increasing utility costs, anxiety over interest rate increases and the growth of online shopping have all been blamed for the lack of consumer spending.
In addition, Retail Traders Association of WA’s Wayne Spencer has told WA Business News it was the global financial crisis that taught consumers to budget.
The Colorado Group was formerly made up of 434 stores across Australia and New Zealand and employed almost 3,500 people.
Ferrier Hodgson, which was appointed receiver in April, said the restructure was necessary to enhance the group’s profitability.
“The restructure of the group would eliminate the loss-making Colorado-branded stores and those other stores impacting on the profitability of the group,” Ferrier Hodgson’s Brendan Richards said.
Colorado is expected to deliver underlying earnings of about $19 million for the 2011 financial year and, following the store closures, Mr Richards said it would become significantly more profitable.
He said the company’s profitable brands, which include Diana Ferrari, JAG, Mathers and Williams, would become the financial engine room of the restructured group.
Colorado-branded footwear will still be sold online and through 200 Mathers and Williams outlets.
Meanwhile, Ferrier Hodgson’s John Melluish, who is the administrator to REDgroup, recently announced that the company would close its remaining nine Borders stores throughout Australia.
Ferrier Hodgson said the stores were closing because no buyers had emerged for the Borders outlets.
“The employees have shown extraordinary commitment in their efforts to keep the business going,” Mr Melluish said.
“Unfortunately, the reasons for the store closures are beyond their control.”
The final Borders stores will close on July 17, but others may close sooner dependent on the sale of remaining stock.
In addition, House has placed five of its WA stores into administration, with only Whitfords continuing to trade after the master franchisor took over its operation.
House administrator, HLB Mann Judd’s senior restructuring and turnaround consultant, Bob Jacobs, said high rents and increases in rent were often the last straw for retail businesses already grappling with dwindling cash flow.