The fall of a retailer of the size and significance of Clive Peeters is disappointing, but not wholy unexpected, according to the Australian Retailer's Association (ARA).
A trading halt was called by the ASX-listed retailer early on May 19. Soon later, McGrathNicol was appointed as administrators, with the first creditors meeting set down for no later than May 28. In an ASX statement, the Clive Peeters administrators said they are conducting an urgent appraisal of the company’s affairs to investigate circumstances leading to their appointment, and to determine whether the underlying business can be preserved.
“We are mindful that many stakeholders will be affected by the appointment of voluntary administrators to Clive Peeters,” administrator, Colin Nicol said in the release. “It is hoped that the business can be stabilised and can continue to trade in one form or another beyond this administration.”
In February, it was revealed that Clive Peeters was able to report a break-even operating profit for the half-year ending December 31, despite being hit by a multi-million dollar accounting fraud. However, from an earlier release to the ASX this month, the retailer said it expected a loss of $4.5 million for the three months January-March 2010, as a result of a tough economic environment for retailers.
ARA executive director, Russel Zimmerman, said he was 'disappointed' to hear of the news, but it was indicitive of a incredibly tough economic climate for retailers, especially those with significant whitegoods business.
"If you look at the Financial Review today, Myer has also come out and said there's a patchy recovery in the market," Zimmerman said. "With the economic stimulus drying up, and the interest rate hikes - I would also expect the housing market to be down at the moment - I imagine that househood goods retailers are doing it especially tough."
Zimmerman declined to speculate on whether we would see more high-profile retailer fall over, but expected the economic climate to remain tough in the near future.
Both McGrathNicol and the management of Clive Peeters declined to comment at time of publication.
A timeline – from bad to worse:
- The first signs that things were amiss came in July of last year, where the retailer posted an operating loss of between $11 million and $12 million for is financial year.
- Then, in August, came the big one – the accounting scandal to the value of $19.9 million in properties.
- At the start of this year, however, things seemed to be improving, when Clive Peeters reported a break-even operating profit for the previous half year.
- In the end, though, it wasn’t enough, with the retailer calling a trading halt just prior to its announcement to the ASX that it was going into administration.