Herringbone and Rhodes & Beckett follow Marcs and David Lawrence to enter administration

Herringbone and Rhodes & Beckett are now following Marcs and David Lawrence to the list of fashion retailers placed into voluntary administration. Two out of its 29 brands with a total of 140 staff were traded out. Cor Cordis was assigned as voluntary administrator.

"We understand from van Laack that their decision to appoint an administrator was taken after the business suffered financial difficulties arising from unsustainably high overheads, some unfavourable store leases, and other residual legacy issues, and we are conducting our own analysis to determine the extent of these issues," Bruno Secatore of Cor Cordis said. He said that the companies have a number of underperforming stores showing the early indication of difficulties suffered by the brand.

Australian Retailers Association (ARA) said that famous fashion brands were facing a number of challenges including weekend penalty rates, high lease expenses and increased competition. Russell Zimmerman, the association's executive director, said the industry needed to understand where the problems were and emphasised that some problems needed to be addressed. He added that the overhaul of penalty rates would be favourable for local retailers in terms of trading conditions.

The administrators aimed to determine the stores that are burning cash. They would also identify the better performing stores so they can move many staff members affected by the stores' underperformance. However, the administrators said some staff members will be laid off.

"Any store can only hold a certain number of employees, so unfortunately there probably will be staff that will be laid off, but we’re trying to maximise the amount of staff that we retain," Secatore said. He added that business cards would be honoured until the business sale and the employee entitlements would be covered.

The administrators said that an ad campaign to find new buyers will begin within the week. Apart from selling the business as a whole, its parts such as online platforms would be sold as well. They were also trying to determine the quantum of secured creditor debt and unsecure creditor debt.

The apparel industry was facing more challenges according to insolvency groups as it tried to balance weakening sales versus rising costs. The latest inflation data last December 2016 showed that clothing and footwear prices slipped by 0.9 percent due to the new brands that entered the industry as well as online competitors.

Herringbone and Rhodes & Beckett are owned by their biggest creditor Van Laack. It was brought out by Van Laack out of administration in late 2008.