Myer has rescued troubled fashion brands David Lawrence and Marcs, buying them out of administration in a deal that looks likely to cost jobs at both high-profile fashion labels.
Staff from both brands were informed that the department store owner had bought the operations from parent company M Webster Holdings on Thursday morning.
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.
Marcs and David Lawrence slipped into administration in February, weighed down by more than $30 million in debt, including $12 million owed to their owner and major creditor Malcolm Webster.
It’s understood Myer made a play for the brands earlier this month after a suitable white knight failed to emerge.
Myer sells both brands in its stores, and chief merchandise and customer officer Daniel Bracken said they were two of the most productive and sought-after brands on the shop floor.
“These brands are very very successful brands at Myer, both are considered part of our wanted brands strategy,” Mr Bracken said.
However Myer’s rescue bid for the two labels is unlikely to save all pf their 1000 staff, with the department store signalling it had not made any decision yet over the future of the Marcs and David Lawrence free-standing stores and “arrangements with other retailers.”
Myer said the acquisition bought it time to “find out what is the future of these brands in Myer.”
Myer has acquired popular fashion brands Marcs and David Lawrence, which collapsed in February.
“We are also pleased that through this acquisition we hope to be able to secure the future employment of a number of the Marcs and David Lawrence people. However at this time it is too early to say how many team members will transition to Myer.” Mr Bracken said.
Myer has not revealed what it paid for the brands, but the acquisition comes just two week after veteran rag-trader Solomon Lew swooped on a 11 per cent stake in the iconic department store chain, fuelling talk he would play a bigger role in Myer’s business.
The sale of the collapsed fashion brands was hampered by Mr Webster’s security over assets, including the brands’ stock, according to potential buyers.
One potential buyer said Mr Webster’s security over the stock was a significant, complicating factor. “No one can do a deal without him because he has a security over the inventory,” one retail insider said.
“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 had a look at Marcs and David Lawrence, with analysts suggesting the Marcs operation had the best prospect of survival, but administrator Rodgers Reidy has already announced the shutdown of the brands’ 10 New Zealand stores.
Retail analysts weren’t optimistic a buyer would emerge for both brands as the Australian apparel sector battles 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.