Receivers William Black and Andrew Grenfell from McGrathNicol have been appointed.
“Wild Pair’s stores will continue to trade while we work with stakeholders, management and staff to stabilise operations in order to facilitate a thorough assessment of the company’s financial position,” Grenfell says.
Wild Pair’s first store opened on Queen St in 1994.
It recently opened stores at the new Northwest Mall in October and Newmarket’s 277 Broadway mall in April, boosting its total number of stores in New Zealand to 23.
First Retail managing director Chris Wilkinson says he’s saddened by the news, as Wild Pair is a unique addition to the New Zealand retail sector.
“It has a bit of an icon brand, as it’s been edgy and the stores are quite contemporary. New Zealand needs that, because we don’t have that sort of homegrown chain out there. Mid-range chains are quite vulnerable and we need to protect them,” Wilkinson says.
The news follows a slew of apparel retailers which have been in hot water this year, including Pumpkin Patch, Shanton, Identity and Jean Jones, while Kathmandu and Kirkcaldie & Stains have issued profit warnings.
Hellaby Holdings has also put Hannahs and Number One Shoes up for sale.
Receiver William Black co-authored a piece on The Register that noted the dangers of apparel retailing in New Zealand.
In the piece, Black and Conor McElhinney highlighted four common themes in apparel retailing that were leading to trouble:
- Being locked into unprofitable stores with no easy exit from the lease.
- An inability to compete effectively with overseas based online retailers.
- A lack of basic retail business metrics to manage the business.
- An inability to respond quickly to the changes in fashion and supply chain mismanagement.
Wilkinson says though it’s not the exact same genre of clothing, the likes of Topshop opening a store in New Zealand earlier this year will be affecting Kiwi retailers such as Wild Pair.
This is because New Zealand is a relatively small market and fast fashion is a competitive space, he says.
“There is only a certain amount to go around. Glassons is regaining strength and picking away at this market, Topshop will have picked away at it, so that’s probably where the biggest issues are for these established retailers.”
He speculated that the rise in online shopping could also be a factor, as could a lack of customer loyalty in the younger demographic.
“Particularly in Wild Pair’s case, their customer demographic is extremely flexible in its shopping choices. If there’s a trend, they’ll easily be swayed,” he says.
While Wild Pair is unique in its offering of 50 percent shoes, 50 percent clothing, Wilkinson says this could pose a problem for consumers.
“The question is, from a consumer point of view, what is their proposition? I take my hat off because I think it’s a fantastic brand and I’m sad this happened – New Zealand needs a retailer that’s a bit different – but do consumers understand what market Wild Pair is going for?” he says.
The release implied that Wild Pair would be looking for buyers and said any expressions of interest should be referred to the receivers.
Wilkinson says if there was a business out there that had the resources to buy Wild Pair, it would be a smart purchase.
“They have great IP behind the business and strong infrastructure in terms of omnichannel. For a business that’s lesser resourced in terms of its capabilities, you could do really well by buying some of that,” he says.
They business would just have to weather out the current tough market in apparel retailing, he says.
Troubling times in apparel
The struggling kidswear retailer reported a $9.1 million after-tax loss for the financial year to July 31. However, it’s battling on, with it net bank debt has been reduced by $20 million in the past year in real terms. It has secured banking facilities with ANZ until December 2017. It still has net debt of $29 million to pay off.
Jean Jones was put into liquidation by shareholder vote in July this year. Its total debt to banks, unsecured creditors, employees and Inland Revenue tops $1.4 million. One of its liquidators said Jean Jones failed because of tough trading conditions over the past summer and winter seasons.
Identity went into receivership in July, with receivers announced Identity was closing down in September. Its debts topped $2 million. Receivers said they were unable to find a buyer for the business. They said the closure reflected the current difficult trading conditions in the retail clothing industry, as shown by the struggles of Jean Jones, Shanton and Postie+.
Shanton went into voluntary administration in July, owing $7.8 million to 206 creditors. It was bought by Revolucija Limited in July and since cut down its stores from 27 to 13. Three new stores have been opened, with the remaining ones rebranded and refitted.
Postie+ went into voluntary administration in June last year and was promptly purchased by South African firm Pepkor. It has since gotten a new CEO and a new flagship store at Albany and says it is moving into a new phase of existence. Read our Q&A with CEO Henry Lee here.
Kathmandu has been in financial strife this year, reporting a net profit decrease of $31.1 million from the year previous in September. As a result, it announced it was shutting its four UK stores and switching to an ecommerce strategy. It’s also reviewing its cost structure and making plans to engage better with its customers.