Queensland retail chain collapses

Blair Speedy
The Australian
February 28, 2012

QUEENSLAND-BASED WOW Audio Visual Superstores yesterday became the latest retailer to collapse as consumer discretionary spending and price deflation cut a swath through the sector.

The company, which employs about 500 staff across a network of 15 stores, was yesterday placed into receivership under the control of corporate advisory firm Ferrier Hodgson.

Ferrier Hodgson partner James Stewart said that, in addition to the downturn in consumer discretionary spending that was being felt by all Australian retailers, WOW had a $20 million bad debt owed to it by a related company that collapsed in 2010.

The company, which owes a further $25m to unsecured creditors and $4m in employee entitlements, generated turnover of $257m in the past financial year, down 8 per cent from a year earlier.

“WOW has been subject to declining sales and profitability, which has escalated in recent months. We will be seeking expressions of interest for a possible sale of the business as a going concern immediately,” Mr Stewart said.

However, with Harvey Norman boss Gerry Harvey last year scrapping the Clive Peeters chain he bought out of administration in 2010, and Woolworths attempting to sell its Dick Smith Electronics business, the administrators may have a difficult time finding a buyer.

The collapse of WOW, which operates 10 stores in Queensland, two in NSW and one in each of Victoria, the ACT and the Northern Territory, follows the closure of more than 1000 retail stores across 18 well-known brands, including Borders and Colorado, last year.

Further closures are in the works, with Just Jeans parent Premier Retail having flagged the shutdown of up to 50 stores and Woolworths this month announcing plans to close up to 100 of its 384 Dick Smith Electronics while also selling the business.

WOW specialises in the sale of home entertainment systems, computers, office equipment, car audio systems, telecommunications, cameras, DVDs, games and CDs — sectors that have been hit particularly hard by price deflation during the past 18 months.