The downturn in the retail industry has been blamed for the collapse of a 25-year-old Adelaide photography studio that has been placed in administration with a debt of $1.5 million.
The collapse of the company comes as ASIC figures show retail and construction are two industries that are suffering the highest number of administrations and receiverships.
Adelaide business Studio 2000 Photographers has been placed in administration, with Korda Mentha partner Chris Powell attached to the company. He says the business, which turns over $5 million, is in the middle of a poor performing industry with significant overheads.
“The downturn in the industry has had a significant impact on the bottom line, and it’s a very labour intensive company – the biggest single item is wages.”
But this isn’t the first time the business has suffered financial difficulties, having falling into administration in the 1990s. However, Powell says a deed of company arrangement was created then and the business has enjoyed a number of solid years since then.
It’s a finely tuned business, but ultimately, it doesn’t operate on tremendous margins. It was very high variable costs.”
The business was contacted this morning, but a representative was not available prior to publication.
Studio 2000 has also been in the spotlight previously, when Today Tonight ran a story on the company in 2007 and questioned some of its marketing techniques. However, Powell says the business has been trading well without complaint.
“Certainly the company had some issues with sales strategies. But our discussions with consumer affairs have been good and constructive.”
“Given the nature of the business and the fact you’re selling to a lot of people, there are going to be some issues sometimes. But it’s been an employer for years and has done well.”
Powell says the advisors have indicated a new proposal for the business will be written up, with creditors given some consideration.
“I believe it’ll be a pretty reasonable proposal, in terms of what they’ll put to creditors.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
