LIGHTS OUT FOR SLEEP CITY
Written on the 16 February 2012
FURNITURE and Bedding Concepts today became the latest victim of the retail price war after entering voluntary administration.
PricewaterhouseCoopers (PwC) partners Michael Fung, Greg Hall and Guy Edwards will be responsible for administering the Victoria-headquartered bedding retailer trading as Sleep City – and related entities including Everyday Sleep Trading, Uinta Beds, SDM Marketing and Global Victoria.
The company employs 450 people in Sydney, Melbourne, Brisbane and Adelaide. There are four Brisbane stores, one on the Sunshine Coast and one Gold Coast outlet.
PwC confirms that none of the 64 stores have closed so far and it is business as usual.
“We are still investigating the causes behind the administration. However, we believe that the current soft retail environment is a contributing factor,” says Fung.
The Australian Retailers Association (ARA) fears that retailers cannot cope with dwindling consumer demand, which has intensified after all of the big four big banks increased interest rates.
“Sleep City is only the latest victim of a chain of retailers forced to handover to administrators or close their doors for good in the past six months,” says ARA executive director Russell Zimmerman.
“While the banks are taking measures to increase income and decrease expenses to protect their billions of dollars in profits, more and more Australian retailers will be looking at how they can even keep trading in such dire conditions.”
Zimmerman is calling for major competition reform of the banking sector. He requests that the Reserve Bank of Australia (RBA) consider pressures affecting retailers and consumers, while at the same time predicting strategies of the big four banks.
“Perhaps the best measure is for the RBA to announce a deep enough reduction in interest rates that it allows for the banks to absorb some of the cut and still pass on a significant reduction to consumers,” he says.
“At the moment, home owners have nowhere to walk due to the oligopolistic nature of Australia’s banking system, which has the big four banks holding about 90 per cent of the home loan market.”
The first creditor meeting will be held on February 23 at the Institute of Chartered Accountants in Melbourne from 1.30pm.
"The first creditors meeting is a legal requirement and will cover some technical matters regarding both the appointment of administrators - and of a committee of creditors. It is not a requirement for creditors to attend and non-attendance does not affect a creditor's rights to submit a claim in the administration," says Fung.