A health products distributor, producer and retail franchise has been placed into receivership, despite the company finalising a capital raising worth nearly $10 million just last month.
The collapse of Healthzone Limited and its entities comes as the retail industry continues to suffer, despite figures showing sales have increased in three consecutive months, with the highest growth in over two years.
PPB Advisory announced on Friday the company had been placed into receivership, with Phil Carter and Chris Hill named as receivers and managers. HLB Mann Judd were also appointed as voluntary administrators of the business and its divisions.
The business itself is a distributor of natural health and beauty products, although distributes health products to stores in Asia, Europe and North America. The business has 250 employees and 110 stores, 80 of them franchised.
In a statement, the receivers said the company will continue to operate as usual.
“We will keep key stakeholders informed of developments,” Carter said in a statement. “We will work constructively with Healthzone’s employees, franchisees, suppliers and other stakeholders to ensure the business continues to operate effectively.”
“We are now undertaking a review of the business and our intention is to prepare the company for sale as a going concern.”
Representatives for the receivers and administrators were contacted this morning by SmartCompany, but a spokesperson was not available prior to publication.
The business, which is over 25 years old, remains profitable, with its most recent financial report revealing a profit of $2.9 million after tax, with revenue of $90 million. However, that fell from revenue of $110 million and a profit of $4.3 million in 2010.
The company had recently finalised a capital raising of $9.9 million in October, with chairman Peter Roach saying the funds would be used to help promote the Healthy Life Chian brand, and development of high margin proprietary products.
That shift to high-margin products was noted in its annual report, with the company saying that it had begun a restructure of the business to “an improved mix of higher margin distributed products… delivering even higher gross margins”.
Although Healthzone said its profits had risen 22% as a result, top line revenues had fallen 17% in a transition period.
It also noted that a third supplier was affected by a lack of stock, “resulting in lost sales for both distribution and retail business units”. Healthzone also noted difficult market conditions in retail, saying 2010-11 had been “one of significant change in the market and our business”.
Healthzone also finalised another capital raising earlier in the year worth $20 million, slated to support the company’s margin growth strategies. As part of that capital raising, its largest shareholder Eu Yan Sang increased its shareholding to 19.9%.
The business was also in the process of listing on the NASDAQ in the United States.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
