August 14 2016
    Sydney Morning Herald

Construction, professional services, retail sectors most vulnerable to collapse   




There are too many marginal retailers out there, according to Michael Carrafa, the executive director of insolvency firm SV Partners. "Everyone has a dream," he said of the sector's enduring appeal despite its thin margins.

Dreamin' retailers are on borrowed time.

SV Partners has warned that a large supermarket or grocer, two computer retail giants, a large clothing retailer, and a big newspaper/book retailer are at "high risk of financial failure" this financial year.   

SV Partners has come up with a scorecard for Australian companies, big and small, on their likelihood of collapse. It reached these conclusions by analysing numbers up to five years old ranging from the trade payment history of each entity to filings with the corporate regulator and Bureau of Statistics data.

Its Commercial Risk Outlook Report found that more than 1200 retailers in Australia were in "financial distress" as consumer spending sputters. Just over 900 retail companies collapsed in the 12 months to March 30, 2016, up 6.7 per cent year on year.

Mr Carrafa said despite record low interest rates, there was not much cash floating around. 


"A lot of people have absorbed whatever remaining equity they have in their homes," he said. "They're leveraged to the hilt and there's no ability to fund working capital." The banks are reluctant to lend money, he said.   

The SV Partners report found that among retailers, clothing retailers and supermarket grocery stores were the most vulnerable.

Retail is the third sector most at risk of financial failure, behind construction and professional, scientific and technical services, the report says.

Of the 959 retailers identified as being the highest risk of financial troubles in the next 12 months, seven of them have turnover of more than $100 million.

One business – in computer retailing – has turnover of $1 billion or more, according to SV Partners. Another business – supermarkets/grocery – has turnover of between $500 million and $1 billion.

But the vast bulk of at-risk businesses – 807 out of 959 – are small businesses, with turnover of less than $1 million.

Separately, a report by business body Ai Group has found that the "lower Australian dollar and Australian businesses' active responses to it have played a significant role in the improvement of business conditions and optimism in 2015 and 2016 compared to earlier years".

"The lower dollar is helping the Australian economy transition away from the heavy emphasis on mining and energy-related investment towards a pattern of growth that is spread more evenly across sectors, geographies and markets."


   

Here's a challenge: go into some of the major general retailers and see if you can find a sales assistant.

True story: I went into DJs at Parramatta and asked if a particular colour of a Polo Ralph Lauren jumper would be coming into the store for winter. The sales assistant said she didn't know because the buyer didn't communicate with the floor staff. I ended up ordering the jumper I wanted online. It cost extra bucks and had to come from the UK but I got what I wanted.

And you call them RETAILERS. More like clueless organisations in by book.

Did they publish a list?

Link please

Well said Cods, what a wonderful supermarket Aldi is.   

21st Century Dialup Network wrote on Aug 15^th, 2016 at 2:09pm:


"JB Hi-Fi shares soar to record high, as the retailer profits from the Dick Smith debacle".

Markets Live: JB Hi-Fi at record high