A Queensland-based discount retail chain has collapsed into liquidation, amid reports it owes unsecured creditors $1.2 million.
Variety chain store Flash Harry’s was established in 2003, with its first store opening in Hervey Bay.
Until recently the chain operated eight outlets in Queensland.
Flash Harry’s revealed three outlets in Maryborough, Childers and Urangan were sold to independent operators on November 10 and a statement on its website said it would be “business as usual” at the remaining five stores.
But on the same day, liquidators Paul Nogueira and Morgan Lane of Worrells Solvency and Forensic Accountants were appointed to A.P. & K.J. Hewton Investments, which traded as Flash Harry’s.
According to News Mail, the chain’s five stores in Bargara, Bundaberg, Hervey Bay, Noosa and Gympie ceased trading on November 11 with staff told of the closures just hours beforehand.
Liquidator Paul Nogueira told News Mail earlier this month Flash Harry’s owed creditors approximately $1.2 million, in addition to debts owed to employees and the company’s bank.
He said the store closures were due to a significant downturn in trading and high commercial rents.
“There’s been a spat of other liquidations of other variety stores throughout the industry,” he said.
“That applied a lot of pressure to suppliers in the market so they weren’t prepared to provide a lot more credit so that put some serious cash flow problems on the business as well.
The collapse of Flash Harry’s follows the administration of competing discount retail chains Crazy Clark’s and Sam’s Warehouse in the second half of 2014.
The parent company of Crazy Clark’s and Sam’s Warehouse, DSG Holdings, was placed in administration in July 2014 and despite the company surviving two previous administrations, receivers KordaMentha were unable to find a buyer for the chains.
Brian Walker, chief executive of the Retail Doctor Group, previously told SmartCompany general discount retailers such as Crazy Clark’s and Sam’s Warehouse rely on a “fragile model” of “high volume and low overheads, in good locations”.
“They have such thin margins to start with, and faced with rising costs, it is very hard to differentiate themselves against the big players with bigger advertising muscle,” Walker said.
The first meeting of the Flash Harry’s creditors is scheduled to be held in Maroochydore tomorrow.
SmartCompany contacted Worrells Solvency and Forensic Accountants but did not receive a response prior to publication.
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First published on SmartCompany in the 23rd of November 2015