Stationery chain kikki.K has fallen victim to the impact of lockdowns in NSW, Victoria and ACT, announcing it has collapsed for the second time in 17 months, putting 300 Aussie jobs in jeopardy.
Last March, the company collapsed owing $20 million to creditors but was rescued by a US-based lifestyle products company, called Erin Condren Designs (EC Designs), which took control last August.
But kikki.K's co-founders Kristina Karlsson and Paul Lacy released a message to staff on Monday about the "sad day" revealing that they were going into voluntary administration again.
"The loss of revenue from the forced and extended closure of so many of our stores due to the Covid pandemic as part of the Government ordered lockdowns has taken a direct massive and insurmountable toll," they said.
The founders added that with no certainty on when the lockdowns would end, the risk was too great for them to continue to fund the business, as it relied heavily on retail sales of diaries, calendars, planners, notebooks, cards and wrapping paper.
"To be clear, this result has been a direct consequence of the pandemic and the unprecedented, devastating financial consequences of past and current store lockdowns, and the prospect and risk of extended closures with no clear end in sight," they said.
"It has simply not been possible to get through such a seismic event outside of our control."
Lacy added: "It's been a massive battle for business survival in recent months.
"We've taken numerous urgent steps to find a way through but the sheer impact and magnitude of lost sales due to Covid lockdowns and the risks for directors associated with continuing to trade with such significant uncertainty ahead gave no choice.
"It's devastating that the pandemic has had this impact on the business."
Retail expert Dr Gary Mortimer from the Queensland University of Technology said he didn't think it was the end of the kikki.K brand, which enjoys plenty of loyalty.
"Putting a business into voluntary administration isn't necessarily a bad thing. It enables a new owner to restructure the business, exit a few leases if they need to and transform the business," he told news.com.au.
"I think the kikki.K brand is a strong globally recognised brand.
"It will need to find a very innovative new owner that guides it through this period of Covid as a probably smaller but profitable business and we may see it go online entirely as Pumpkin Patch did or morph and go into concessions in other stores like Darrell Lea.
"The chocolate maker wasn't able to make it as physical speciality retailer but now its ranged in most supermarkets and is a strong brand."
Administrators from global restructuring firm Ankura will handle the voluntary administration and will be led by its senior managing director Quentin Olde.
He said the firm was appointed on Thursday and is reviewing the business.
"We are working with the directors and owner to assess the options and while doing that will make decisions about the operations of the business including the stores," he told news.com.au.
"The business currently operates 36 stores of which 30 are closed due to Covid-related issues in Victoria and NSW and that is the main impact on the business – its inability to withstand another retail shutdown in the Covid environment."
Mr Olde said the sale process would commence later this week for interested parties to either buy or recapitalise the business and he expects there to be strong interest.
"It's a very strong brand and has a very strong following," he added.
"It is in this situation because of the lockdowns and the retail environment in Australia and the decision by the owners to not continue to fund the retail structure with uncertainty of lockdowns and how long they are going to go for."
Some staff were already stood down after retail store closures because of lockdowns, and the business would continue to trade online and in its sites across Queensland, South Australia, Western Australia and Singapore.
But Olde said more employees would likely be stood down.
Kikki.K is heavily dependent on its stores, which have been closed for an indefinite period as part of Government-ordered lockdowns, added director and EC Designs representative Tonia Misva.
"While it is not the outcome we hoped for, we will work closely with the administrators to support our team members during this process as well as explore all possible options for this beloved brand," she said.
Mortimer warned the "incredibly challenging retail environment" created by the pandemic, could see more brands face the same fate as kikki.K.
"It's not unreasonable to think as continued lockdowns progress and restrictions, particularly around persons per square metre remain in place, that businesses will continue to struggle and fall into voluntary administration or simply close," he said.