Just three weeks after emerging from voluntary administration, car audio and mobile phone retailer Strathfield group has launched an aggressive comeback plan that will see the group open 60 franchised stores in the next 18 months.
Strathfield collapsed into administration in January under the pressure of mounting debts and a poor Christmas period. But in early March, creditors voted to approve a deed of company arrangement backed by investor Tony Hakim and his company Clear Communications, which is also the largest shareholder in Strathfield.
Under the deed of company arrangement, Clear Communications will pay Strathfield’s secured creditor, GE Money, $4.45 million and give it 200 million shares in the company, while Strathfield’s unsecured creditors, who had claims of $17.2 million, will receive just 3c in the dollar, plus the proceeds from the sale of 50 million Strathfield shares in 12 months.
But chairman and Hakim associate Vaz Hovanessian is wasting no time getting the company back on track, starting with the launch of a new slogan and advertising campaign (with the new tagline, “In tune with you”).
Next is an expansion of the group’s store network. Since September 2008, Strathfield has closed 34 stores, leaving the 62 most viable stores. Of these, 55 are franchised or have franchise agreements pending. Over the next 18 months, Strathfield plans to open 60 new stores and kiosks (small stores, usually placed in the middle of shopping centres) and the majority of these will also be franchised.
“Franchises have proven more profitable and successful than company-owned stores,” Hovanessian says.
“This model will reduce risk, expenditure and liabilities for Strathfield. We will choose better and more accessible locations and improve the inventory carried to better service customer needs and build trust in our products.”
The group also plans to widen its product range and push into new segments with the launch of Strathfield Office Solution and Strathfield Home Solutions.
Strathfield plans to lodge its results for the December half year and a pro-forma balance sheet post the restructure of the group in the next few weeks. After that, it is expected the stock will resume trading on the ASX.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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