Computer World blames stock theft for demise
- 24 October, 2007 12:11
Management at Victorian reseller chain, Computer World, has attributed its demise to alleged stock thefts and trading losses.
External administrator, Andrew Hewitt of Grant Thornton Recovery, was appointed to the company on October 15.
Computer World general manager, Hasan Yuvarajah, said the decision to go into voluntary administration followed the alleged theft of about $800,000 worth of goods by an employee. The alleged theft was reported to Victorian police about five months ago. The business had also been suffering from cash flow issues and was losing money, he said.
"For us to inject more capital into the business would have been silly at this stage," Yuvarajah said. "We have injected about $1 million a year in capital for the last two years, which we can't recover." Yuvarajah said his family had worked in the industry for 15 years and were emotional about the decision to wind up Computer World.
"There is a lot of competition, especially in the OEM space. The company grew very rapidly and the business started dropping down from about last year," he said. "I hope for the best and that someone buys the company and continues trading. The company and staff were very good."
According to the administrator's report, Computer World owes about $4.7 million to its creditors, including Dicker Data ($499,000), Ingram Micro ($494,000) and Cellnet ($364,000). Dicker Data managing director, David Dicker, said it mainly supplied HP and Toshiba branded desktops and notebooks.
"We will end up losing about $50,000 on that deal, which is obviously painful but we would not have dealt with them without credit insurance in the first place," he said. "In the overall scheme of things, considering how long we had dealt with them, we've probably done alright." Cellnet managing director, Stephen Harrison, said it had worked with Computer World for a while and was insured for the debt.
"It is never a good thing when somebody like that goes into administration but I think it's a sign of the times. Things are fairly tough out there, it's not easy and the margins are being eroded. When you are a retailer you have got to have the right structure and costs in place," Harrison said. "I think that will send a shock wave through the industry."
Bluechip Infotech sales director, Ron Jarvis, said it was owed about $90,000 by Computer World. He said Bluechip was insured.
Multimedia Technology managing director, John Hassall, confirmed it was also owed about $250,000.
Computer World had four stores in Victoria and two in NSW. Its main Dandenong store will continue to trade, but the other stores have been closed.
The administrator's report said the company had 35 staff, 25 of which had been terminated.