Narta to buy out struggling Retravision group
“Retravision Western have concluded that we are no longer able to support a stand-alone national or state business model for the Retravision brand,” CEO Paul Holt said in a letter to shareholders dated November 7.
Struggling Retravison is selling its operation, which consists of 180 stores to the Narta buying group. The news comes after 104 Retravision Southern stores went bust earlier this year, owing millions of dollars.
Several stores also defected to Betta Living franchise, operated by BSR.
The move to wind down Retravision was a “serious decision that has not been taken lightly,” but Holt cited “the significant damage” done to the brand in Victoria preceded by the demise of Retravision NSW..thus “it is likely that the Retravision brand will be replaced in all of the Eastern seaboard states.”
“We are now focused on an orderly wind down of Retravision Western while also seeking to secure a high integrity transition of our remaining business,” Holt said.
Read: Retravision Has Little Future In Their Current Format
Issues with suppliers due to the shrinking numbers of stores and dwindling buying power in the group was a major factor, as was current market conditions cited as “the worst in memory”
Retravision CEO Holt said: “the issue of credit limits and stores being able to open appropriate accounts with the majority of suppliers is proving a massive challenge for many stores across Australia. A significant number of stores have not been able to open commercially competitive accounts (or, in many cases, accounts at all) due to restrictions placed on suppliers by insurers.”
Of the 180 stores remaining in the group, 100 are currently trading below $1.5m per annum in purchases.
“Suppliers are not providing our business with “competitive pricing” in the market, primarily due to significant number of very small stores trading in our group.”
“Current market conditions are the worst in recent memory. In fact, the Retravision business is down circa 25% on the same period last year and, whilst some of this deterioration is due to the disruption to our business model following the demise of the Southern business, the market at present is very challenging indeed with no sign of significant improvement on the horizon.”
However, Retravision stores with turnovers of $3m or less may not be accommodated under the Narta platform, but Holt said the group is in discussions with Leading Edge group to find a home for these stores.
Narta or Leading Edge will provide advertising, IT and price negotiation to ex-Retravision stores.
Retravision is working on a more detailed plan and will provide communication to all stores in early January, Holt confirmed.