Stewart Free and Andrew Spring – from insolvency and turnaround firm Jirsch Sutherland – were appointed joint administrators of Valleygirl New Zealand Ltd late last week.
At this time, staff were out of pocket for two weeks’ wages, Free says.
Pay owed will be given priority over other debts but will depend on the success of the administration period, he says.
All staff who continue to work during the administration period will be paid for that work.
“The administrators are aware this is a difficult time for staff. We will liaise with staff at appropriate points to keep them up-to-date.”
Free says Valleygirl New Zealand suffered from a downturn in trade, and had problems securing stock due to low cash flow.
“Our investigations are continuing, but at this stage it appears that the difficulties securing stock were a result of the cash flow issues.”
This resulted in trouble keeping up with payments – especially to landlords, he says.
However, customer comments on the stores’ social media pages suggest customer service was also a problem.
Free says the administrators are looking at the best options for keeping the business running, including a potential sale. It is possible Valleygirl and Temt could separate.
“The business is for sale and all offers will be considered,” he says.
Voluntary administration gives “breathing space” to a company in financial distress, allowing the appointed administrator to rearrange the company’s affairs to avoid liquidation, according to the New Zealand Companies Office.
Valleygirl NZ calls itself a “fast fashion brand”, offering high fashion at low prices. It has 17 stores across the country, and is currently advertising for part time positions in Auckland, Wellington and Christchurch.
Temt – which offers slightly more formal wear for young fashionistas – has 16 stores from Auckland to Christchurch.
The Australian Valleygirl and Temt stores are run by another, unrelated group and are not affected by the voluntary administration.
However, Free and Spring have been appointed joint liquidators of Australian retail shops Paper Scissors and Chicabooti, which have already stopped trading.
Facebook comments: ‘Hands down the worst customer service’
Both Valleygirl and Temt have been criticised on social media for poor customer service in New Zealand.
One customer snapped a photo at Valleygirl’s NorthWest store of staff sitting on the counter. She complains how rude it is for them to have their bums on the counter and ignoring customers.
Other customers give Valleygirl zero out of 10 for customer service.
One Temt customer complains about a lack of acknowledgment by staff.
However one Temt customer, Kimorra Lavia, loved the label so much, she made a tribute video on YouTube.
“They're inexpensive and trendy,” she says.
Valleygirl and Temt also scored poorly for ethics when their manufacturing and buying practices were assessed. Both scored D+ in the 2016 Australian Fashion Report, produced by Baptist World Aid
Valleygirl and Temt management did not respond to requests for comment.