On Thursday, KPMG administrators Peter Gothard and James Stewart said that 37 of Jeanswest’s 146 stores will close and 263 employees will be made redundant as part of the restructuring process geared towards attracting new owners.
Mr Stewart said in a statement, circulated on Thursday, that the decision was not taken lightly and that the administrators remain mindful of the serious impact of store closures on people’s lives.
“We must also work to maximise the opportunity for this business to be sold or restructured — to give it the best chance to continue,” Mr Stewart said.
Jeanswest entered voluntary administration last week, following a troublesome start for retail in 2020, with news that Curious Planet would see all of its stores closed in the coming weeks and winemaker McWilliams Wines also calling in administrators.
Andrew Spring, a partner at insolvency firm Jirsch Sutherland, explained recently that retail failures “aren’t new”, but that the situation is likely to persist without significant reform of how retailers manage their businesses.
‘Confidence worse than the economy’
Despite tax cuts and record-low interest rates, which are expected to come down further, Australians have been reluctant to spend, with retail undergoing its deepest downturn since 1990.
Deloitte cautioned recently, in its latest Access Economics Business Outlook, that Australia is suffering from cratered confidence which, coupled with drought and housing-related weakness, will leave it locked into slow growth.
The financial services giant took a slight swipe at the Reserve Bank’s choice of words over the last few months, arguing that its “communication blunders” have left confidence worse than the economy itself.
Addressing the state of retail, Deloitte opined that although consumer spending may start to recover through 2020, it will be a pretty modest recovery at best, with consumers simply facing too many headwinds, notably including their own weak confidence.
“Major risks to the retail sector stem from battered consumer confidence, ongoing weak wage growth and unsustainable price increases. Stimulus measures failed to date because consumer confidence has cratered,” Deloitte said.