Thursday, May 30, 2024

May still tough month for retailers

As Australian retailers continue to face uncertain headwinds, May remains one of the worst months for external administrations, according to insolvency specialist company Jirsch Sutherland.

“We started the year with a number of high-profile brands such as Maggie T and Zachary the Label entering into administration and, more recently, Esprit announcing it is closing all its Australian stores,” Jirsch Sutherland partner Amanda Young said. “May was the worst month for this sector in both 2016 and 2017, and now 2018 already has a number of casualties.

“Common factors that may cause financial distress for a retailer include a lack of systems and processes, no track record, an absence of effective marketing, market saturation and location – or lack thereof.

“Traditional bricks-and-mortar operations continue to face major challenges. They’re being slammed by high rents, staff costs and the growing competition from online stores, and that’s exacerbated by other key contributors such as obsolete stock issues and poor record-keeping.”

Jirsch Sutherland also noted that the number of retail trade companies entering external administration in January and February this year was 20 per cent higher than in the same months of 2017.

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