Kikki.K plunges into receivership, citing “perfect storm” of factors
Australian stationery business Kikki.K has fallen into voluntary administration, with co-founder Paul Lacy blaming a “perfect storm” of factors.
Australian stationery business Kikki.K has fallen into voluntary administration, after what the founders of the company described as a two-year effort to “save” the business.
The high-end brand was founded by Kristina Karlsson and Paul Lacy in Melbourne in 2001. It operates 65 stores across Australia, the United Kingdom, New Zealand, Singapore and Hong Kong.
The company employs 450 full-time equivalent employees and turns over $70 million in annual revenue.
However, back in 2017, the business had more than 100 stores and had even entered into a partnership with US retailer Nordstrom.
In a statement issued on Tuesday, the company said Jim Downey of J.P Downey & Co has been appointed as voluntary administrator.
Receivers Barry Wright and Bruno Secatore of Cor Cordis have also been appointed to the company and will continue to trade it in the immediate future.
“It is with profound regret and sadness that we take this action,” co-founder Kristina Karlsson said in the statement.
“This business began with a young girl’s dream 20 years ago and became an international success story with customers in over 150 countries.”
In the same statement, Kikki.K co-founder and chief executive Paul Lacy said the company had been fighting for survival for two years, and had been working on a deal with an unnamed global company.
“But we ran out of time and had no choice but to place the company into external administration,” Lacy said.
The founders, who are the majority shareholders, are hoping a buyer can be found for the business. In the meantime, they said it will be “business as usual” for Kikki.K stores.
Kikki.K has a customer database with 3.7 million members, according to the company, while over 20 million people visit Kikki.K’s physical and online stores each year.
The retailer is now asking those customers to share their “love” for the brand on social media, with an Instagram post from Tuesday evening already attracting more than 2,500 likes and over 100 comments.
Many of the comments are from previous employees of the company, who describe working for Kikki.K as the “best job” they’ve had.
“Incredible company atmosphere and the kindest people I’ve ever met,” said one commenter.
“Forever grateful for the experience I had and the people I met both team members and guests who was enthusiastic and passionate about their love of stationery and all things positive.
“Working at Kikki.K genuinely was life changing and has made me far more positive and grateful for the little things.”
“Chasing big dreams means facing many ups and downs”
Karlsson said on Tuesday evening, “the dream is absolutely still alive”.
“It’s such a beautiful and valuable brand that has earnt a respected place in the lives of millions around the world. There is extraordinary value in that,” she said.
“We’ve faced many challenges along the way from start-up to now and we’ll be working on finding a way to move forward again. I can’t remember a time in our journey when it’s ever been easy. Chasing big dreams means facing many ups and downs.”
The retailer has also been hit by a “perfect storm” of factors that have had negative effects on the business, said co-founder Paul Lacy.
“We’d not long started our store rollout in the UK when Brexit hit and the economic uncertainty that came with it,” he said.
“Then there was a huge rates overhaul in the UK which lifted rates on our stores by hundreds of thousands.
“At the same time, we like all retailers have been dealing with the profound structural change of people moving their shopping habits to buy more online and less in physical stores – requiring strong long-term investments in digital transformation.
“Then came the social unrest in Hong Kong which ate into our sales in Asia, and like many other retailers our Christmas sales globally were down substantially.”
“And, finally we’ve had the triple-whammy of soft consumer demand, the business impact of bushfires and more recently the unprecedented and profound impact of coronavirus which is hitting so many businesses and countries so hard.
“This unprecedented line-up of external factors, particularly in recent weeks, has really taken its toll.”
Receiver Barry Wright added that Kikki.K has “joined what has become a long list of financially distressed retailers, given softening consumer spending, high leasing costs, compounded by a disappointing December / January trading period”.
“That said, we believe Kikki.K has a strong brand with a large global following, producing sales of almost $70 million a year,” he said.
“We’re now urgently working with management in respect of a plan to restructure the business and enhance value, whilst also investigating a sale of the Kikki.K.”
Kikki.K joins a growing list of Australian retailers to call in external managers in recent months, including Ishka, Colette by Colette Hayman, Jeanswest, Harris Scarfe, Bardot and Curious Planet.
Also contributing to the sense of a so-called retail apocalypse has been decisions by other retailers, including EB Games and Bose, to close multiple stores, and German hypermarket Kaufland’s shock exit from Australia.
Meanwhile, global cosmetics company Mary Kay announced last week it had closed its operations in Australia and New Zealand, as it no longer sees “a sustainable future in either market”.
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