Fifteen stores to close at Fletcher Jones as buyers circle
Administrator Cor Cordis said 15 of Fletcher Jones' 45 menswear outlets across Australia would close immediately.
Fifty three retail staff and eight in head office have taken redundancies.
The remaining 30 stores will continue to trade as normal.
Cor Cordis partner Bruno Secatore said the closures were necessary to give Fletcher Jones, which entered administration last week, the best chance of being sold. Secatore said the 15 stores had all suffered losses over the past six months and needed to be lanced. "A lot of buyers have indicated locations they wouldn't be looking at taking on, and a significant number of those are the ones we have closed down," Secatore said. "We would have been trading at a loss. It would have just held up the sale process with all 45 stores, and it would have meant a prospective purchaser was looking at stores that we knew were not attractive," he said.
"As administrators, it was important that we acted quickly to shore up the viability of Fletcher Jones to make it an attractive acquisition so it can keep trading." There had been a "better than expected" response from potential buyers, he said, with 30 initial inquiries translating into the significant expressions of interest. The decision was difficult and some staff were in shock Secatore.
Nine of the 15 stores to close are clearance shops containing 'low-grade' stock at DFO outlets.
Some of those are at airports where rents are traditionally high, squeezing margins even further.
Secatore said he would not comment on past business decisions but admitted rent was a major factor in the closures.
"It just gets back to demographics, the stock mix. Rent, which is a killer for any retailer, has been a significant cause," he said.
"There's nine clearance centres, the type of stock in there has seen its day."
Indicative offers are due on Friday, December 23 but the administration period is likely to be extended.
The administrators are due to provide recommendations to creditors by January 23.
The staff to lose their jobs will be paid their full entitlements, costing about $600,000 in total.
The company also owes about $8.5 million to unsecured creditors and is also liable for rent on the closed stores.
released: Thursday, December 15, 2011
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