Harris Scarfe – one of South Australia’s oldest retail chains – entered voluntary administration today after being put into receivership by a creditor.
The move comes less than a month after the company traded to Allegro Funds, a Sydney-based private equity firm known to turn around struggling businesses.
In that deal, for an undisclosed sum, Greenlit Brands also sold Allegro Best and Less, Postie and Debenhams’ Australian arm.
Combined the retailers operate out of 322 stores nationally and employ 6100 people.
Following the acquisition, Allegro immediately announced its intention to close Australia’s only Debenhams store, which only opened in late 2017, in Melbourne’s Collins Street.
Harris Scarfe for sale
With 66 outlets, Harris Scarfe has more than 1800 people on its payroll.
Its annual revenue last year was $380 million.
Deloitte Restructuring Services’ Vaughan Strawbridge, Kathryn Evans and Tim Noonan are the receivers, called in by a secured lender.
BDO Australia’s Andrew Sallway and Duncan Clubb have been appointed voluntary administrators.
It is hoped the retailer will sell as a going concern and no stores would need to close.
Mr Strawbridge said that during the sale process, Harris Scarfe would trade as normal, staff will be paid and that gift cards and lay-buy deposits will be honoured.
Harris Scarfe – a (170 year) history
Founded in Adelaide 170 years ago by George Harris and John Lanyon, Harris Scarfe is now headquartered (with Greenlit) at Melbourne’s 576 Swan Street, Richmond.
In 1971 the business changed hands and was listed on the Australian Stock Exchange.
Five years later Harris Scarfe was acquired by Charles Davis Limited, controlled by Melbourne businessman Sir Donald Trescowthick (this company’s stable also included the McEwans hardware brand in New South Wales and Victoria – which it sold to Bunnings in 1993).
By 1995, Harris Scarfe, regarded as Australia’s third biggest department store, had 38 outlets.
In 2001 it was placed into receivership – reportedly owing about $200 million to creditors – but it was turned around by management, recording strong growth when in 2007 it was snapped up by Sydney-based Momentum Private Equity.
In 2012, Momentum sold the business to Pepkor, a South African private equity firm.
Backdrop of the Greenlit and Allegro deal
Steinhoff International, which is listed on the Johannesburg Stock Exchange, purchased Pepkor five years ago for US$5.7 billion.
Harris Scarfe was subsequently put under the control of an Australian-based management division, Steinhoff Asia Pacific.
In 2017, Steinhoff International announced a $A9.2 billion black hole following years of accounting errors – and has since been selling businesses.
It recently wrote down $A18 billion worth of assets.
Last September Steinhoff Asia Pacific renamed as Greenlit Brands, after reportedly gathering about $300 million in resources to operate independently from its parent.
Greenlit sold Harris Scarfe, Best and Less, Posito and Debenhams’ Australian arm to focus on its more profitable businesses.
Following the deal, Greenlit was left with eight brands, including Freedom Furniture, Fantastic Furniture, Plush, Snooze and OMF.
It now employs 3800 people and trades at 300 stores.
Greenlit also owns eight manufacturing sites and a logistics business.
Other Australian retailers to recently fall
Last week we reported that Abbotsford-based retailer Bardot also entered voluntary administration.
The second half of that story – pasted below – details the plenty of other local businesses to fail recently:
Sydney-based Co-Op Bookshop, which employs 180 people in 63 stores, nationally, collapsed late last month.
Co-Op picked up Australian Geographic from Myer Family Investments in 2016.
Australian Geographic was founded by Dick Smith in 1992.
The Dick Smith electronics retailer, which Mr Smith established in 1968 – and was last owned by Anchorage Capital – closed 363 stores, firing 2460 people, in 2016.
Italian restaurant Criniti’s entered voluntary administration last week.
A fortnight ago, supplements store Muscle Coach also collapsed, with $1 million in debts.
In October, furniture retailer Zanui, and Shannon Bennett’s restaurant chain, Benny Burger, fell.
Last November, we reported that clothing retailer Roger David would close all of its 57 Australian stores.
Another menswear store, Ed Harry, collapsed in January, 2019.
Make up retailer Napolean Perdis shut its 56 shops this year too, joining two sportswear brands Skins and Stylerunner, womenswear store Karen Millen and footwear retailer Shoes of Prey.