Topshop operator in negative equity after generating $4.1m of losses

McGrathNichol's Conor McElhinney said the retailer was in negative equity

Top Retail, which operated the local Top Shop and Topman stores, was in negative equity after generating $4.1 million of losses in its three-year life in New Zealand.

The first receivers' report by McGrathNichol's Conor McElhinney and Kare Johnstone show the retailer in negative equity of $2.9 million as at Sept. 7, the date of receivership, after accumulated losses since its launch in 2014 outstripped the $1.3 million of shareholder funds. The shareholders of the retailer included interests associated with Kiwi clothing firm Barkers, Christchurch property investor Philip Carter and fashion designer Karen Walker and also extended loans totalling $6.1 million to Top Retail.

The company's stores on the high streets of Auckland and Wellington were closed in September after the receivers failed to find a buyer, leaving net debt owed to the appointing lender of $2 million, the shareholder loans and some $1.8 million to trade creditors.

The receivership was the latest in a line of retailers struggling to make a traditional bricks-and-mortar model work when online rivals avoid the overhead of a high street site and are accused of skirting customs duties that traditional vendors face.

Top Retail's assets were valued at $8.1 million, of which $5.9 million was in furniture and fittings. The company had inventories totalling $787,000 at the time of receivership, and managed to sell all stock before the stores were closed, the receivers said.

Staff were owed $95,000 of unpaid wages and holiday pay when the receivers were appointed, and Inland Revenue Department was owed $55,000 of outstanding income tax and a further $1,400 in GST.

(BusinessDesk)


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6 Comments & Questions

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Reading this makes me feel sooo guilty after I rushed back to cash in the gift vouchers given me at the fabulous Cocktail Party which I was invited to for the opening of the flagship store in Auckland.

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The NBR is obsessed with receiverships and liquidations. At least they gave it a go. I hate these negative focus stories all the time

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The thing that gets me, is they have the story, then don't let you comment on it. What's the point of having a comments and question section then?

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Hi Ivan, our comments section is moderated. We welcome intelligent debate and sometimes comments are edited or withheld to ensure quality discussion. We don't allow abusive and/or defamatory comments. Thanks.

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Topshop struggled in NZ because it was overpriced stock from previous seasons. You can't get away with selling old stock as 'new' in the age of the internet - haul videos on Youtube, Instagram modelling etc.

Topshop's target market know what is available in the UK, Europe and US and they want it, not what they saw a summer or two ago.

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Sigh. TopShop's problem wasn't "retailers struggling to make a traditional bricks-and-mortar model work".

It's pretty well known in the local rag-trade that their problem was the entire model that the Australian and NZ franchises were built around. That of only having access to the TopShop's northern hemisphere leftovers - i.e. what wasn't selling well in Europe - and having to buy it at considerably worse than wholesale rates and not having the means to return unsold stock.

In other words, a disaster waiting to happen.

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