NZ Topshop follows Oz experience

As New Zealand Topshop licensee Top Retail falls into receivership the fate of its Australian counterpart may indicate what’s in store for the troubled clothing retailer.

The Australian business was run by experienced retailer Hilton Seskin, who brought the Topshop brand to Australia six years ago through a licensing deal with brand owner Arcadia Group, owned by British billionaire Sir Philip Green.

However, as in New Zealand, the concept did not thrive and administrators were appointed in May. At the time the chain had nine standalone stores and 17 concessions in Myer stores, as well as an online outlet.

Sales were reportedly about $A90 million and the chain had 760 employees.

The reasons for its failure were never spelled out but in an interview in June Mr Seskin blamed the store’s problems on Arcadia in the UK.

In remarks reportedly made at a panel discussion during a Chamber of Commerce lunch in Sydney he said: “Unfortunately, you make some mistakes in life,” including “getting into a franchise arrangement where the franchisor has basically had no responsibility.”

“We had absolutely, well I’m going to say very, very little control over what inventory came into the market,” Mr Seskin said.

“Products that were made in Asia were shipped to the UK, put through a recycling plant, as you call it, a warehouse facility in the UK, converted from US dollars to GBP [British Pounds], flying it out to Australia. So, the model was just broken.”

On August 25 administrators Ferrier Hodgson announced they had sold four stores – two in Sydney and one each in Melbourne and Brisbane – to Arcadia.

Commenting on the receivership of the New Zealand business, receivers said there were “similar issues” behind the failures of the Australian and New Zealand licensees.

“It became apparent that the company was unable to continue to trade due to the losses being incurred and the directors, therefore, requested the secured lender appoint receivers to the company.”

The Australian businesses reportedly ran up debts of $A35 million by the time administrators were appointed. No figure has been provided as yet for the indebtedness of the New Zealand chain.

The New Zealand licensee Top Retail is owned by a small group of private shareholders, including the owner of the Barkers chain Chris Grieve, fashion designer Karen Walker and NBR Rich Lister Philip Carter.

It is understood Topshop was to be a flagship tenant of the new Crossing retail precinct in Christchurch, developed by Mr Carter’s firm Carter Group.

Mr Carter did not immediately return a call seeking comment.

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