Brashs, Australia's biggest music retail chain, is in the hands of receivers for the second time in four years, with debts of $80 million Australian ($53.6 million).
Trading will continue, with no immediate job losses expected for the 2,000-person staff in the national chain's 105 outlets. By March 7, its administrators, accountancy firm KPMG, will recommend an overhaul or sale.
KPMG is keen not to split up the company, which began trading 90 years ago. Already one prospective buyer, CD/consumer electronics chain JB Hi-Fi, has indicated its interest. The company's joint managing director, Richard Bourous, indicates that if JB buys Brashs, it will retain staff but ax unprofitable outlets--a process current management has been engaged in during the last 12 months.
The Asian currency crisis, already blamed for a 6% drop in job advertisements in Australia in January, is also attributed to Brashs' woes. Brashs' majority shareholder, Singapore-based businessman Ong Beng Seng, has been divesting some of his many Australian investments in recent weeks--including fashion stores and hotels--due to rising interest rates in Singapore.
Ong bought a 51% stake in the music retailer in July 1994 for $40 million; Brashs had gone into voluntary administration two months before with debts of $150 million. At the time, the chain had 170 stores and a reported 20% market share.
In early 1996, Japanese consumer electrical company Daiichi Corp. bought a 49% stake for $7.5 million. Ong and Daiichi Corp. injected a further $40 million.
The last reported result showed a loss of $15.7 million in the fiscal year that ended in September 1996. The chain had forecast sales of $360 million for the same year.
Says KPMG representative Lindsay Maxsted, 'Brashs unfortunately has incurred significant trading losses over the last 12 months, and the shareholders' equity has been exhausted.'
A creditors' meeting before the end of the month will determine if credit lines are to be extended. 'It'd be a tragedy if Brashs crumbles, because they've played a large role in Australian music culture,' says Denis Handlin, chairman/CEO of Sony Music here. 'But some astute person can see that Brashs have some outstanding locations, and it just needs some significant changes and (a return to) their core business to turn it around again.'
The immediate effect of Brashs' decline will be reflected in the charts. Says an executive at another label, 'Chains like Sanity and JB aren't online, so they're not part of the electronic chart collation process. Brashs make all the difference in charting music that is new and different.'
(c) BPI Communications, 1998 ALL RIGHTS RESERVED
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