Like many of the companies featured in today’s analysis, industry pressures are only a smokescreen for a variety of internal problems. Retravision’s downfall is no different.
The Retravision Southern company was placed in administration in May. The company acts as the buying and marking licensor for 104 privately-owned stores in Victoria, New South Wales and Tasmania. Administrators weren’t appointed to the actual stores.
“The company’s ability to operate as a going concern had been impacted by the industry-wide decrease in consumer discretionary spending being experienced by retailers,” Korda Mentha’s Bryan Webster said in a statement after the appointment.
But there were more problems afoot.
The collapse came after an attempt to merge the company’s three divisions. Those plans had been put on hold after Retravision Southern couldn’t pay some suppliers. It wasn’t long before administrators were appointed.
The Lesson: The lesson here is actually located in the fragmentation of the company. Retravision acted as a co-operative model with three different buying divisions across the country working for the privately-owned stores. This co-operative model dated very quickly.
A cohesive buying strategy across a company’s entire network is needed when facing hard times. Squeezing every cent out of your product is essential in a low-margin environment – divisions can’t be left to their own devices.
The first warning signs for Azumah were probably that it was a football and athletic shoe company named after a boxing star.
Confused? You’re not alone.
Named after Ghanaian boxer Azumah Nelson, who famously defeated Jeff Fenech in 1992, Azumah was spruiked on The Footy Show and promoted by AFL legend Robert “Dipper” DiPierdomenico and Melbourne Storm coach Craig Bellamy before it entered administration.
Despite its celebrity supporters, Richard Judson and Loke Wong of Judson & Co were appointed as administrators last month.
“The company was set up mainly to do sales on the internet and I can’t find much evidence of sales taking place and I suspect that is the reason for the appointment,” Judson told SmartCompany.
He says Azumah has debts including “a couple of hundred thousand dollars” owed to a secured creditor and some debts to unsecured creditors as well.
The Lesson: Celebrity endorsement only goes so far. It’s more important to have a product that people actually want.
This West Australian charter airline collapsed into administration in June, just days after the Civil Aviation Safety Authority upheld a grounding order against the company citing safety concerns.
Administrators KordaMentha were appointed to Alligator Airways following a grounding order from CASA on May 18.
The Federal Court in Melbourne found there were reasonable grounds the company was engaging in, or likely to engage in, activity which “contributed to or resulted in a serious and imminent risk to air safety”.
“These incidents involved forced landings where CASA believes employees of Alligator Airways were aware of significant defects affecting the safety of aircraft prior to flight,” it said.
The company was also accused of having a deficient safety culture, and an “inability of key personnel to carry out their safety obligations and key positions unoccupied or not functional”.
Alligator Airways flew charter flights from Kununurra and Broome, offering customised tours and safaris as well. The company had been operating in the Kimberley since 1983.
The Lesson: Safety should have been Alligator Airways number one concern. For all businesses, health and safety is something you have to have a handle on at all times.
1st Fleet was a giant of the roads, with 1,000 trucks and over 1,200 staff, but as we know all too well, there’s no such thing as too big to fail.
The trucking empire came crumbling down with the appointment of Riad Tayeh and David Solomons of deVriesTayeh as administrators.
Workers were locked out and their jobs terminated, with rising fuel prices seen as a key factor in the company’s demise.
However, director and owner Stephen Brown told SmartCompany the collapse was “a friggin’ disaster” and said 1st Fleet’s funder, Coface was to blame.
“These gooses want to go home to France and wanted the money back in France and didn’t care about the 600 jobs. It’s just disgraceful,” he said.
In turn, administrators de Vries Tayeh said 1st Fleet’s company officers were being investigated in relation to potential offences after they discovered the transport company owed about $100 million when it collapsed and likely traded while insolvent.
It was left to the government to pick up the tab with $8 million in employee entitlements – wages, redundancies and holiday pay entitlements – paid through the federal General Employee Entitlement and Redundancy Scheme.
The Lesson: Not much can be gained in the blame game once a company has gone under. Instead, keep an eye on cashflow before it spirals out of control leaving employees and creditors in limbo.
This article first appeared on August 28th, 2012.
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
