By Claire Reilly
The Queensland-based electronics store WOW! Sight & Sound has gone into receivership this afternoon, due to “declining sales and profitability” and $20 million of bad debt, according to Ferrier Hodgson administrator, James Stewart.
Mr Steward, Tim Michael and Stewart McCallum of the company Ferrier Hodgson were appointed Receivers and Managers of WOW Audio Visual Superstores Pty Ltd, which operates 15 stores across Australia (10 in QLD, 2 in NSW; 1 in VIC; 1 in NT; 1 in ACT). The company employees approximately 500 employees.
Speaking about the administration, Stewart said WOW had been impacted by $20 million of bad debt related to the 2010 collapse of Aristocon Pty Ltd, as well as the difficult conditions of the current retail climate.
“WOW has been subject to declining sales and profitability which has escalated in recent months,” he said. “We will be seeking expressions of interest for a possible sale of the business as a going concern immediately.”
He also noted that employee entitlements would be protected under the Federal Government’s General Employee Entitlements and Redundancy Scheme (GEERS). While product manufacturers’ warranties are expected to operate normally and lay-bys would be honoured, Steward said gift cards would not be, because of the business’ financial situation.
Founded in Townsville in 2003, WOW saw a 7.7 per cent year-on-year decline in group turnover for the 2011 financial year, down to $257 million. Administrators confirmed that unsecured creditors are owed 10 per cent of that figure – approximately $25 million – while employee entitlements are expected to total $4 million.