May terrible for retailers as another goes under
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May terrible for retailers as another goes under

The collapse of yet another Australian retailer has highlighted the difficult trading conditions that typically face the sector in the month of May.

Women’s fashion retailer Metalicus — owned by casual wear retailer General Pants Co — collapsed, with reports there is no hope of saving the business.

No statement about its collapse was listed on the Metalicus website at the time of publishing, although the site did advertise a “closing down sale”.

The company has been contacted for comment.

Insolvency specialist Amanda Young, a partner with Jirsch Sutherland, said May is typically a bad time of year for the retail sector.

“May was the worst month for this sector in both 2016 and 2017, and 2018 already has a number of casualties,” she said.

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“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 of its Australian stores and then yesterday fashion label Metalicus going into voluntary administration.”

According to Ms Young, the number of retailers falling into administration in January and February 2018 was already 20 per cent higher than the same period last year.

Among them were Kangaroo Tent City & BBQs. This was soon followed more recently by the likes of Aussie Farmers Direct and Baby Bounce and Baby Bounce Qld, while fashion house Oroton found a last-minute lifeline.

“Our experience is that traditional bricks and mortar operations continue to face major challenges — as evidenced by Metalicus and Esprit. 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,” she said.

“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.”

 

May terrible for retailers as another goes under
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