Retail bloodbath in Australia as Billabong offloads brands to pay debt, Payless Shoes collapses & Pumpkin Patch begins fire sale

The current year, 2016, is a difficult year for Australian retailers. Supermarket giant Woolworths had to sell some of its businesses, Dick Smith closed and three retailers have deep debts or have collapsed.

The Australian reports that Billabong, a larger surfer and apparel company, is considering shedding some brands such as Tigerlily, VonZipper and Xcel to reduce its $270 million debt. At the same time, the retailer would simplify its business structure as Billabong considers refinancing option, company Chairman Ian Pollard said at Billabong’s annual shareholders’ meeting on Tuesday.

Although Billabong almost closed in 2013 when billions of dollars of shareholder value were destroyed, the company sees encouraging signs from the US and its turnaround strategy working that the retailer expects a full-year EBITDA of $60 million to $65 million.

Pollard says the improvement is due to the lower cost base and focused way forward when Billabong International began the new financial year. But he explains the transformation that the company is pursuing takes time because of its magnitude. However, every step the retailer takes strengthen the core of the business.

Payless Shoes and Pumpkin Patch are not as lucky as Billabong. Payless Shoes, one of the biggest independent shoe retailers in Australia, collapsed and was placed on Tuesday into voluntary administration. The company’s board appointed Jim Sarantinos, James Stewart and Peter Gothard, partners at Ferrier Hodgson, as voluntary administrators.

At risk of losing their jobs at Payless Shoes, which earns $75 million yearly and has 131 stores and an online business, are 870 employees. Sarantinos called for expressions of interest for a sale of the business which went into administration in 2013, The Australian reports.

At Pumpkin Patch, a retailer of children’s apparel, more than 1,600 jobs would be lost in February after the company failed to find a buyer for the chain, Sydney Morning Herald reports. However, at Pumpkin Patch’s head office in Auckland, more than 60 employees were already laid off.

The retailer immediately started a fire sale for Korda Mentha, the receiver, to claw back as much as it can from Pumpkin Patch’s inventory before the store closes in December. But in some stores, the fire sale would run until February 2017.