Major consumer electronics and IT retailer in Queensland Wow Sight & Sound has hit the wall with the company being placed into receivership late this afternoon.Shalin Thomas, General Manager Buying and Merchandising at the Company, said at the recent CES Show in Las Vegas the Company was struggling but he was confident that a new management team “could turn the business around”.
Both IT and CE Vendors are exposed to the collapse with administrator Ferrier Hodgson admitting late today that between $25 and $30M is owed to CE and IT Vendors. During the past few years, the company has suffered from a collapse in property values with their bankers restricting borrowings due to the fall in value of property assets.
A senior executive of the company told ChannelNews tonight that it does not look good: “Cashflow got tight after Xmas and business did not pick up due in part to Queensland holding a State Election and the general economic gloom associated with the economy”.
We had an 8% per cent year-on-year decline in revenue during 2011 with Companies like JB Hi Fi picking up marketshare because we could not range a lot of products due to cashflow problems.Revenues fell to below $260 million and there is at least $5M in unsecured creditors. A lot of major creditors are covered by their insurance cover”.
The company which operates 15 stores across Australia including 10 in Queensland has more than 500 employees and has in the past been a lavish sponsor of NRL football and V8 motor racing.
Receiver James Stewart from Ferrier Hodgsons aid the group had been impacted by a bad debt of about $20m to a related company, Aristocon Pty Ltd, which collapsed in 2010.
“WOW has been subject to declining sales and profitability which has escalated in recent months,” he said.
Shalin Thomas who joined the group from Woolworths said that he was hoping to deliver a new range of stocks to stores which was one of the reasons why he was at the CES show.
Stewart who admitted that staff was owed up to $4M said “We will be seeking expressions of interest for a possible sale of the business as a going concern immediately.”
Current staff is protected under the Federal Government’s General Employee Entitlements and Redundancy Scheme (GEERS).
Among the brands being advertised on the company’s web site are Toshiba, Uniden, Microsoft and Sony. In the TV market the company is selling Panasonic, LG and Samsung products with all of these retailers set to be impacted by the collapse.