These stores largely sell cheap rubbish but their business models no longer work.
Wages and rents are too high and the consumer has stopped buying frivolous junk.
Crazy Clark's calls in receivers January 21, 2009 - 10:09AM
THE private equity boom of 2005 has delivered its first casualty.
Catalyst Investment Managers and CHAMP's 402-store Crazy Clark's and Go-Lo chains of bargain stores will be sold after its syndicate of three lenders called in receivers.
The first step to recover the $96 million the banking syndicate is owed will be to sell the Crazy Clark's, Go-Lo and Sam's Warehouse businesses, said Michael Cave, a spokesman for the receiver Ferrier Hodgson Corporate. The Australian Discount Retail group has more than 2700 employees.
The private equity pair paid $212 million for the stores in November 2005.
Since they took over they have closed 50 loss-making stores but failed to achieve their targets of creating a discount operator with $1 billion in annual sales.
ADR's third retail business, the Tasmanian $2 shop Chickenfeed, isn't in receivership or voluntary administration. Its 28 stores would continue to trade normally, the statement said.
The discount variety business was bought in a buy-out funded by National Australian Bank, ANZ and BOS International, Ferrier Hodgson said.
