$6 million Christmas decorations business collapses

A Sydney decorations business with annual sales of over $6 million has entered administration.

Manfred Holzman of Holzman Associates was appointed administrator of The Christmas Warehouse parent-company Retail Marketing Systems on April 14.

The administrator is currently seeking expressions of interest for the business or its assets. The first meeting of creditors is scheduled to take place on April 29.

Established in 1985 as a direct-mail business, The Christmas Warehouse specialises in Christmas trees, lights, decorations and visual merchandise.

The business operates six bricks-and-mortar outlets in Sydney, five of which are only open during the Christmas season. The Christmas Warehouse website, which is said to generate sales in excess of $1 million, continues to trade.

However, the Retail Marketing Systems website has gone offline, with a notice to customers saying that it is undergoing maintenance.

Colin Porter, managing director of CreditorWatch, told SmartCompany seasonal businesses operating in the retail sector are being affected by the general downturn in the retail industry, as well as a trend of suppliers tightening their credit.

This means companies like The Christmas Warehouse are battling lower sales at the same time as needing to generate greater cashflow to continue to purchase stock.

Porter says: “It all comes down to management and being prepared” and “understanding what the future holds”. “Margins and profits are lower than they have ever been and that means there is little room for error,” he says.

While Porter says that companies that supply seasonal businesses also need to aware of any changes in the structures or practices of the companies they supply. “These creditors may not be seasonal operators so they need to be paying particular attention to their clients who are”.

The administration of The Christmas Warehouse follows the collapse of another seasonal business, Christmas hamper company Hamper Magic, in February last year.