FTI Consulting, acting as receivers for Cue Clothing Co, announced the closure of 26 stores across the Cue and Veronika Maine brands in Australia and New Zealand, SmartCompany reported. Store closures were set to begin on 15 October, with the pace of individual closures to depend on stock levels at each location.
The 26 stores to be closed were identified through the sale process, in which prospective buyers were asked to nominate which locations they would want to take on as part of any transaction. The receivers said that based on feedback received and non-binding indicative offers submitted, a common group of stores had been identified that prospective buyers would not seek to continue operating.
When the group collapsed, it had 51 locations across Australia and New Zealand, comprising 42 full-price boutiques and nine outlets. Once all closures are complete, roughly 20 stores are forecast to remain, according to Business News Australia.
Cue Clothing Co's total debts before entering administration were reported as $55 million, with the main operating entity Cue Co alone owing $42.12 million. Among the major creditors, the Australian Taxation Office is owed $1.46 million and Scentre Group is owed more than $6.22 million.
Long-term lease costs have been pointed to as the principal burden on the business's profitability, with rising occupancy costs and weak consumer spending weighing on operators locked into such arrangements. The number of employees affected by the closures has not been disclosed, though the receivers stated that affected staff would be redeployed into continuing stores wherever possible.
Department store concessions, including those with Myer, David Jones and Ballantynes, are unaffected by the closures. FTI Consulting said trading at the group continues on a going-concern basis during the sale, though a number of commercial and transaction matters with shortlisted parties are still unresolved.
Customers can continue to shop at affected stores until stock levels are depleted, after which those 26 locations will shut. Concession shoppers at Myer, David Jones and Ballantynes are not affected by the closures.
Reporting: SmartCompany, Yahoo Finance, The Nightly, Business News Australia
Written by Pick & Scroll News from the reporting and documents linked above.
