Hundreds of workers from Marcs and David Lawrence stores will still lose their jobs in the next few days despite Myer’s last-minute rescue of the high profile brands.
Myer announced on Thursday it would acquire the failed fashion brands which went into administration in February.
Marcs, David Lawrence in voluntary administration
The companies behind fashion brands David Lawrence and Marcs have been placed in voluntary administration. Vision courtesy ABC News 24.
The move surprised many retail insiders, who believed the chain was committed to a “wanted brands” strategy rather than investing in private label lines.
Even after the Myer deal some 130 jobs will still go, with the shut down of 36 stand alone stores in Brisbane, Adelaide, Perth and Canberra leaving just three David Lawrence stores and nine Marcs outlets trading in Sydney and Melbourne.
Administrator Rodgers Reidy has already shut down 13 in-store boutiques or concession stores in Myer and David Jones as well as the New Zealand chain for both brands, decisions that have already cost at least 100 jobs.
Myer refused to reveal what it paid for the inventory and intellectual property associated with Marcs and David Lawrence or comment on whether influential rag-trader and Myer shareholder Solomon Lew had any influence over the decision.
Mr Lew swooped on an 11 per cent stake in Myer last month sparking talk of a take-over bid for Myer.
The department store chain’s deputy chief Daniel Bracken said the mid-market labels were two of the “most productive and sought-after brands” on the shop floor in Myer.
Myer has acquired popular fashion brands Marcs and David Lawrence, which collapsed in February.
David Jones and Myer both operate concessions for both labels and insiders suggest Myer’s acquisition will likely lead to the shut down of these retail spaces in David Jones.
Mr Bracken said Myer had been “quietly hoping” an appropriate buyer would emerge but when the administrator indicated plans for a wind-up process it was forced to step in.
Myer’s deputy chief Daniel Bracken won’t say how many of the stand-alone Marcs and David Lawrence stores the department store chain will hold on to. Photo: Supplied
“We were faced with losing these brands that are extremely productive in our portfolio,” Mr Bracken said.
“What we have not acquired is Webster Holdings, we’ve acquired the assets of Webster Holdings that have the most value for Myer.”
Myer admitted the acquisition was as much about “buying time” as it was about purchasing the two fashion labels.
“We were motived by the fact both brands align very strongly with our strategy but I don’t think we can make any assumptions at the moment,” Mr Bracken said.
“We’ve bought ourselves time, the administrator is closing a number of stores but there are a small number we asked them not to close.”
Myer said it was working with the administrator to “determine the future of the brands’ concessions, free-standing stores and arrangements with other retail partners.”
Marcs and David Lawrence collapsed under the weight of more than $30 million in debts, including $12 million owed to owner and major creditor Malcolm Webster.
The sale campaign for Marcs and David Lawrence was hampered by Mr Webster’s security over assets, including inventory, according to retail insiders.
One potential buyer said Mr Webster’s security over the stock was a significant, complicating factor.
“You could buy the operating companies but he could take all his inventory out, the legal structure affords the current owner an undue level of protection, in my opinion.”
A number of parties ran the ruler over over the labels, with analysts suggesting the Marcs operation had the best prospect of survival.
Retail analysts weren’t optimistic a buyer would emerge for both brands as the Australian apparel sector grapples with the impact of flat wages growth and increasing competition from the global heavyweights like H&M and Uniqlo.
A rash of retail collapses, including Payless Shoes, Pumpkin Patch and Herringbone since December threatens to push more than 4000 workers into unemployment, and analysts warn there is more pain to come as traders battle to balance rising utility bills with flat or declining sales growth.