PAS Group, the owner of several wholesale fashion brands including Review and Jets, has entered voluntary administration, despite the board believing the company is solvent.
The move is a last-ditch effort to restructure the company in a way that will enable it to operate sustainably into the future.
In a release sent to the ASX on Friday, the board said that Stephen Longley, David McEvoy and Martin Ford – the administrators from PwC – will undertake a preliminary review and assessment of group operations.
Longley told Inside Retail that while it’s too early to be definitive, “some of the fundamentals would suggest that under a different model, the business could be more sustainable, noting the challenges presented by COVID-19”.
The news comes roughly one month after PAS Group said it was working with advisors to accelerate a review of operations with the goal of reducing complexity and creating a more focused business largely through the closure of unprofitable stores.
PAS Group’s earnings in recent years have been impacted by the shift away from wholesale and department stores, the rise of online shopping and a challenging retail environment more broadly. The company exited 42 stores in FY19 and said it wanted to focus on more profitable locations and online.
But unfavourable market conditions and the COVID-19 crisis have made it difficult to execute a restructure, according to CEO Eric Morris, who deemed administration the best way to effect change while protecting all stakeholders.
“Against the backdrop of many retailers closing their doors, we have taken proactive action to put PAS Group in the best possible position to navigate through the pandemic and subsequent economic challenges,” Morris said in a statement on Friday.
PAS Group employs 1300 people and operates 225 stores across Australia and New Zealand. Its retail and wholesale brands include Review, Black Pepper, Yarra Trail, Jets Swimwear and Designworks, which supplies Everlast, Mooks and other brands to major retailers, including Target.
Stores will continue to trade as normal, in line with current local restrictions across Australia and New Zealand. All store credits and vouchers will be honoured.
The company’s securities have been suspended from quotation.
This story was updated on 29/5 at 13:30.