Sportsgirl creditors face freeze

By KARYN SCHERER

The future of 19 Sportsgirl clothing stores was up in the air last night, following a decision by the chain's Australian owners to put the company in voluntary administration.

The move, which has no equivalent in New Zealand but allows a business to continue operating while freezing its creditors, was announced to staff on both sides of the Tasman yesterday. It follows an admission by its owners that it is struggling with $A80 million worth of debt.

Accounting firm Ferrier Hodgson is advising the company on a restructuring plan. A spokesman for Ferrier Hodgson in Australia, John Spark, said it was too early to say what might happen to the New Zealand stores.

However, he stressed the company was hoping to sell the chain as a going concern, possibly within the next six or eight weeks.

"It's business as usual for the time being while we try and ascertain the sale process which is well advanced in Australia."

Mr Spark said he did not yet have a detailed picture of the company's problems, although it was apparent unprofitable stores and competitive trading conditions were dragging down the chain.

The chain's owner, Sportsgirl Sportscraft Group, is known to have been plagued by poor merchandising and inadequate financial controls.

Around 100 full and part-time New Zealand staff have been told their jobs will continue in the meantime and the chain has said it will continue to honour exchanges, gift vouchers and laybys. It is planning to rev up its profile with a pre-Christmas advertising campaign.

It is one of several Australian-based clothing chains whose problems have been widely publicised in recent years.

Country Road, which is now partly owned by Woolworths of South Africa, has spent the past two years trying to claw itself back into the black.

The problems of the Katies clothing chain are also well known. In March, the chain's owner, Australian retail giant Coles Myer, confirmed the chain was losing money but denied it was looking for a buyer.

Another Australian chain, Just Jeans, warned investors this week that its profit this year was unlikely to match last year, with sales falling 4 per cent.

However, the chains are getting little sympathy from manufacturers and retailers, who have blamed an "Australian invasion" for driving down profits and pushing independents out of the malls.

All seven of Sportsgirl's Auckland stores are in major shopping malls.

The chief executive of the Apparel and Textile Federation, Paul Blomfield, said New Zealand manufacturers believed the Australian chains had only themselves to blame.

"What we've believed for a while is the chain store-dominated mall environment has not been attractive. It has not been exciting for the consumer and eventually consumers have got jaded and moved into other areas."