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Jeanswest Appoints Administrators Who Close 37 Stores

Could the ongoing increase in the popularity of online shopping be the reason for the store shutdowns we’ve seen that have left so many employees jobless?

263 Jeanswest employees in Australia, including 21 from the head office in Melbourne, have lost their jobs, and 37 stores set to close, administrators have confirmed.

Multi-national accounting firm KPMG announced the closure on January 15th and appointed Peter Gothard and James Stewart as volunteer administrators of the Jeanswest Corporation Pty Limited.

KPMG offers professional services to businesses needing tax advisory, audit, and assurance services. In Australia, it works with community partners to help solve financial and tax issues in small and large companies. They have already commenced the restructuring as its sale gets underway.

Stewart stated that administrators would look into reassigning team members where possible and also supporting the affected through the Jeanswest’s Employee Assistance Program.

The extent of the closures is countrywide. KPMG confirmed that 37 Jeanswest stores located across NSW, Queensland, Western Australia, Tasmania, and Victoria would shut down.

Jeanswest, Like Other Retailers Experiences Retail Woes

This Australian retail brand first opened in Perth, Western Australia. Alister Norwood founded the company in 1972 and grew it into a business of 146 stores nationwide employing 988 people.

This brand made its mark with a vast denim range from wardrobe staples to maternity wear.

By 1984, Jeanswest had 28 stores across Western Australia, and between 1985 and 1992, the expansion had reached Queensland, New South Wales, and Victoria.  Jeanswest then cast their eyes abroad, in an audacious development into Hong Kong. In 1994 Glorious Sun, a Hong Kong company took over the brand and expanded it into China, Vietnam, Russia, and Indonesia. 

According to Gothard, Jeanswest will continue with its operations while the appointed administrators conduct an immediate analysis of company operations.

In a press release circulated on Thursday, January 16th, Stewart stressed, “The decision to proactively restructure the business early in the administration process has not been taken lightly. “We are very mindful of the serious impact store closures and staff redundancies have on people’s lives.”

He further stated that the decision to shut down 37 stores was a heavy one but mandatory, adding that the downsizing would increase the chances of attracting new buyers. They, however, did not mention whether there have been offers made or any aspect of the sale process currently underway,

This announcement to shut down 37 stores is indicative of lagging growth in the retail sector.

McWilliam’s Wines – Australia’s sixth-largest wine company, which has been in the same family for 140 years – announced that it, too, had appointed voluntary administrators. Harris Scarfe, another well-known Aussie brand, closed 21 stores across five states.

Other Brick-and-Mortar Retail Stores Also Succumbed in 2019

In terms of retail growth, 2020 has so far been a dud. This downturn follows a terrible 2019 that saw profits fall, and several Australian retail brand names flounder and die.

Curious Planet, an educational retailer, formerly known as Australian Geographic, also announced its closure of 63 stores in mid-January. This announcement came after the company failed to get buyers for the label.

In January 2019, both Aussie sportswear brand Skins and menswear retailer Ed Harry ran into financial trouble. Ed Harry went into voluntary administration, and Skins applied for bankruptcy in a Swiss court.

British brand Karen Millen and footwear retailer Shoes of Prey also collapsed in March 2019. September saw Karen Millen announce that it would close all its stores Down Under, leaving 80 staff with uncertain futures.

To make matters worse, the beauty empire Napoleon Perdis announced that it would close 56 Aussie stores for stock take, appointing administrators to oversee the process. Scores of its stores have since shut down.

And so the year went on, with more and more well-known brands throwing in the towel. In October, burger chain Benny Burger, which belongs to celebrity Chef Shannon Bennet, also went into administration, a fate which befell Red Rooster outlets in Queensland soon after.

Then, in November, popular furniture and homewares company, Zanui and fitness company Muscle Coach, went into voluntary administration.

To cap the year, famous restaurant chain Criniti also went into voluntary administration, with several of its 13 locations earmarked for permanent closure.  

Following the Trend of Retail Industries Shutting Down, What Does it Mean for both Large and Small Businesses in Australia?

According to Professor Gary Mortimer, Retail Expert on Marketing and Consumer Behaviour from the Queensland University of Technology, this meltdown is a dreadful beginning to the new decade, and the catastrophe is not anywhere near the completion stage.

“It has been an unpleasant phase, and we might continue to see it happen over the next month,” he said.

This phenomenon affects both national and international brands. Another brand closing all its retail stores in North America, Japan, Europe, and Australia is none other than Bose. According to a spokesperson, 119 stores will close down due to most of their products now selling online rather than in-store.

Analysts are calling the emerging trend of retail closure a ‘retail apocalypse.’ In 2019, Australian retail sales dropped by 0.1% in April, below the 0.2% increase earlier forecasted. Non-food sales, which are a good measure of discretionary spending, fell by a more significant 0.2%, with NSW and Victoria driving the national decline.

It is not just large businesses; small businesses are going under too. This downturn has a devastating effect. It can leave business owners with unpaid bills and colossal debt, which could lead to bad credit ratings that won’t be easy to overturn. 

To further underscore the slowing down of this sector, the fourth-largest retailer in the world abandoned its plans to expand its Kaufland brand in Australia, after investing millions of dollars.

It could be that the closure of so many national and international brands in the market, was one reason why German hypermarket Kaufland ceased its plans to invest in the Australian market in January 2020 – but the jury’s still out on that one.  

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