Myer has purchased Marcs and David Lawrence for an undisclosed sum, but the future of the struggling fashion labels’ stores and staff remains bleak.

Marcs and David Lawrence went into administration in February after a slide in sales pushed them into the red.

Rather than buy the entire business, Myer is only purchasing the brands and current inventory, to maintain its ability to sell Marcs and David Lawrence in its department stores.

Myer’s chief financial office Daniel Bracken told the Financial Review that the department store only stepped in as a buyer of last resort, after the administrator could not find a purchaser for the fashion labels.

“These brands are very, very successful brands at Myer, both are considered part of our wanted brands strategy and both are highly productive [they have high sales per square metre of store space],” he told the newspaper.

“We had been watching the situation hoping the business would be acquired [but] in the last week-and-a-half we realised that was unlikely – it appears they could not find a buyer, and it was heading down the track of a potential wind up.”

Mr Bracken denied the purchase was in any way linked to Solomon Lew’s share raid on the retailer last month.

Big brands ‘without any of the obligations’

Retail consultant Brian Walker from The Retail Doctor said it appears to be a smart purchase.

“I think Myer have been prudent in the way they’ve negotiated this,” he told ABC’s The Business program.

“That their acquisition is really about the brand name, without any of the obligations that go with it, such as employees, lease costs, overheads.”

“Really, what Myer were looking at was, two brands within their portfolio that were facing closure and the opportunity to buy them, probably for a song.”

Mr Walker said Myer, already struggling to grow or even maintain sales, was faced with the threat of losing millions of dollars in turnover generated by the two popular brands.

“At their peak, David Lawrence and Marcs were a hundred-million-dollar business, they were very well regarded brands,” he said.

“There’s an element of defensiveness in this.

“They won’t want to see the sales that they had been achieving with David Lawrence and Marcs evaporate.”

It is a strategy that is familiar to Myer, which has previously bought out more successful retail brands to bring them in-house.

“They’ve had experience in this before: Sass and Bide, Trent Nathan and the like, they’ve bought these brands at various points in their history, bring them into the business, trade them very much as this ongoing business,” Mr Walker observed.

“Myer have taken the strategic play, and that’s brought them into their fold, into their business, purchasing the IP [intellectual property], the brand, the stock and so forth, but none of the lease obligations.”

First published on ABC News on April 13th 2017