Fashion retailer PAS Group goes into administration

Just as the nation's retail sector was starting to see some signs of positive movement, the fashion group behind retro-inspired label Review, womenswear brands Black Pepper and Yarra Trail, and JETS Swimwear, has become the latest casualty.

The PAS Group, which operates 225 retail stores and has about 1300 staff, appointed PwC partners Stephen Longley, David McEvoy and Martin Ford as voluntary administrators of the group on Friday.

PAS Group also sells on a wholesale basis to department stores such as Myer and about 200 specialty retailers. Its Designworks division supplies licensed brands such as Everlast and Slazenger and private label apparel to retailers including Myer, Rebel, and discount department stores Harris Scarfe, Target and BIG W.

PAS Group joins a long list of retailers that have failed – even before the virus struck – such as Jeanswest, Topshop, Roger David, Bardot and Harris Scarfe.

The failure of major customer, Harris Scarfe, hit PAS Group hard. Designworks was also caught up in the collapse of Harris Scarfe and is owed about $685,000.

However, COVID-19 has forced many companies over the precipice.

This week the South African parent of David Jones said COVID-19 accelerated its plans to shrink its footprint and cut floor space at its upmarket department stores, where sales had tumbled over 35 per cent in the eight weeks to April 30.

Wesfarmers, the owner of Target, on May 22 said 1300 staff at the department store could lose their jobs after it decided to move quickly to close sites and convert large-format stores to the Kmart brand.

The PAS Group board, led by former Target and Billabong International boss Launa Inman, said it was of the view that the company is still solvent, but given the tough economy and the difficulties of restructuring during the COVID-19 crisis, administration was the best way to pursue the changes needed in the business.

Serious trouble was on the horizon about four weeks ago in late April when the company's shares went into trading halt so the board could consider an emergency restructuring after shutting its stores due to COVID-19 in March.

PAS Group chief executive Eric Morris said Friday it was a ''difficult'' decision to put the company into administration.

The retailer is 65 per cent owned by US-based hedge fund Coliseum Capital Management, which launched a partly successful takeover offer pitched at 63¢ share in 2015.

The Melbourne-based company was floated in June 2014 by former owners Macquarie Private Equity, Propel Investments and State Super, but the shares have never traded above their $1.15 issue price.

All PAS Group stores will continue to trade as normal, in-line with current local restrictions across Australia and New Zealand. The stores have progressively been re-opened as government restrictions lifted. All store credits and vouchers will be honoured.

PAS Group temporarily closed all its bricks and mortar stores in Australia and New Zealand in late March and stood down its 1300 staff when government measures became tighter amid the fight against coronavirus.

Its concession stores in Myer also stopped trading when the department store closed all its sites on March 30. Myer stores have since re-opened.

Mr Morris said PAS Group was taking a proactive approach.

“The Australian retail sector was already facing significant challenges prior to the COVID-19 pandemic,” he said.

“Against the backdrop of many retailers closing their doors, we have taken proactive action to put PAS Group in the best possible position to navigate through the pandemic and subsequent economic challenges.”

He vowed to be open and transparent with all staff.

PwC's Mr Longley said the administrators are undertaking a preliminary review and assessment of the group's operations as a starting point.