Dick Smith and Laura Ashley’s demise is only the tip of the iceberg as more major Australian retailers are facing the axe, according to a report by accounting firm SV partners.
The SV Partners March 2016 Commercial Risk Outlook Report has identified 11 large retailers with turnovers of $100 million or more displaying the same behaviour exhibited by Laura Ashley and Dick Smith prior to their collapse last year. Data also suggests that another three Australian retailers with turnovers of more than $500 million are sitting in the second highest financial failure high risk category.
SV Partners managing director Terry van der Velde says it is important for the industry and governments to listen and address the distress signals in the Australian retail market in the next few months.
“Retail is the canary in the coal mine for the Australian economy,” he explains. “Our analysis shows that three other Australian retail giants are sitting in the same high risk category as Dick Smith and Laura Ashley in December 2015, meaning we could see more big retail names in serious financial trouble in coming months.
“To reduce financial risk, we urge businesses to be vigilant in accounts collection, closely monitor cash flow, and make sure their financial reporting gives a complete and up-to-date picture of your financial situation.
“Most importantly, these businesses need to seek professional advice to make sure their finances are in order,” he adds.
The report’s findings show nearly 3,000 retailers are expected to face some sort of financial distress within the next 12 months including defaults, bankruptcies and court writs.
“It’s not just large retailers that are feeling the effects of increased international and online competition, our advisors have seen a steady increase in external administrations across the Australian retail sector over the last 12 months.
“Our findings indicate thousands of retail businesses of varying sizes are at risk,” van der Velde concludes.
By Marion Gerritsen
