Kathmandu founder Jan Cameron has been confirmed as the buyer of collapsed discount chain Australian Discount Retail, owner of the Crazy Clark’s, Go-Lo and Sam’s Warehouse chains.
But she is going to have help turning ADR around – Robert Atkins, the chief executive of Harris Scarfe and the architect of that company’s turnaround after its near-collapse in 2001, has emerged as a minority shareholder in the buyout.
Cameron’s chain Retail Adventures is believed to have paid just over $100 million for ADR, which collapsed in January with debts of $200 million. There were around 120 expressions of interest in the business and four serious offers.
The debt will not be transferred to the new owners under the deal, although exactly how much money unsecured creditors are likely to receive as a result of the sale remains uncertain.
The deal guarantees the 2500 permanent and 7500 casual jobs at ADR, which has more than 350 stores in its network.
The notoriously publicity-shy Cameron released a short statement after the deal was announced. “I am delighted to have the opportunity to invest in such a significant player in the Australian retail market. This business has a real opportunity to re-establish itself as the leading player in the discount variety sector.”
Atkins will serve as the chairman of Retail Adventures, and Richard Broug, ADR’s former head of merchandise, will return to the company as chief operating officer.
Atkins says the opportunity to get involved with the ADR purchase was an exciting one.
“I’d decided to move from stock standard CEO roles to more strategic board roles. I thought the investment opportunity was a great here, given the obvious value you can extract when you buy a business out of receivership.”
He believes the business’s size is crucial, as it will give the new owners the change to manage costs across the group and negotiate better deals with its 800 suppliers.
Three initial priorities will be improving sales and gross profit through better merchansing and pricing; investing in fixtures and inventory in some stores; and improving cost management.
Speed will be crucial – the faster the new owners move, the more they will able to cash in on the downturn-led move to discount retailers. “I think there will be a flight to value in this climate,” Atkins says.
The deal is the latest in string of investments in the retail sector made by Cameron since 2006, when she sold Kathmandu for over $200 million.
She has bought stakes in baby goods retailer Postie Plus and children’s clothing company Pumpkin Patch, and has also established Dog’s Breakfast Trading Company, which has 20 stores in Melbourne and Tasmania.
Last year BRW valued her net worth at $505 million.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
