300 employees axed as book retailer retreats

By Blair Speedy   

More  than 300 employees of collapsed book retailer RedGroup have been sacked after administrators announced the closure of 37 Angus & Robertson stores and one Borders bookstore.

Administrator Steve Sherman of corporate recovery firm Ferrier Hodgson, who was handed control of the company on February 17, said the stores would close over the next three weeks.

“This restructure is necessary for the future of the business — these stores were the least viable of the 260 RedGroup retail outlets and needed to be closed in order to protect as best as possible the future of the business,” he said.

“As administrators, we need to take these difficult decisions in order to give people at the remaining stores their best chance at a long-term future.”

National Union of Workers industrial officer Dominic Melling said the 321 staff made redundant — including 24 from Borders in Sydney’s Rouse Hill and 22 from an A&R store in Perth — would find it very difficult to get new jobs in the current retail environment.

“Making so many people redundant so quickly is surprising,” he said.

Retailers, including Woolworths and Harvey Norman, have reported massive falls

in consumer discretionary spending over the summer period.

Mr Melling said it was unclear whether staff who had been made redundant would receive full payment for any accrued leave.

“We just don’t know how much is in the kitty — it’s clear that there’s some pretty significant debt in the company, and our concern is to make sure that in the absence of a job, people get paid all their entitlements,” he said.

Creditors were told on Tuesday that the company owed $7.8 million in entitlements to about 2500 staff and $118m to a subsidiary of private equity group Pacific Equity Partners, which bought the business in 2004. Publishers including HarperCollins, Random House and Macmillan have also identified themselves as creditors owed millions of dollars, in addition to shopping centre giant Westfield.

RedGroup’s assets comprise $119.9m in stock, $140m in goodwill and just $6.4m in cash.

None of RedGroup’s 90 stores in New Zealand were marked for closure, and the online divisions of both Borders and Angus & Robertson were unaffected. However, a spokesman for Ferrier Hodgson said further store closures could not be ruled out.

Mr Sherman said there would be assistance provided for employees who might need help in seeking new employment.

A total of 321 REDgroup Retail staff were made redundant following the announcement of the closure of 38 bookstores (37 Angus & Robertson stores and one Borders store)

Where the closures are:
VIC …… 15
NSW … 11
QLD …. 7
ACT ….. 2
WA ….. 2
SA …… 1
Article from The Australian, March 2011.