The court ordered Ally Fashion into liquidation due to insolvency concerns, following an application by a landlord for rent arrears.
Ally Fashion, a well-known Australian women’s fast fashion retailer, has officially entered liquidation, resulting in the closure of 51 stores and the loss of 250 jobs.
The retailer, which was founded in 2001, had grown to operate over 160 stores across the country before facing financial difficulties that led to its collapse.
On Feb. 28, the Federal Court of Australia ordered Ally Fashion into liquidation due to insolvency concerns, following a landlord’s application for rent arrears.
The Court appointed Jeff Marsden and Duncan Clubb from BDO Australia as liquidators. As part of an “urgent assessment,” the liquidators determined that shutting down underperforming stores would improve the company’s financial viability.
Nineteen of the stores to be shut are located in Queensland, 11 in New South Wales, eight in Victoria, seven in South Australia, and six in Western Australia.
While 51 stores will be permanently shuttered, the remaining 109 locations will continue trading under a license Agreement with a company linked to Ally Fashion Director David Dai.
“Ally Fashion is a well-known Australian brand, with a dedicated team,” said liquidator Jeff Marsden in a statement.
“The closure of underperforming stores and entering into a licence agreement will allow the business to continue operating in the short term while we urgently explore options to restructure, recapitalise, or sell the business.”
Cost of Living Pressures Continue to Affect Retailers
Ally Fashion’s liquidation comes when other Australian retailers are also struggling. Recently, Mosaic Brands, which owns Noni B, Rivers, and Millers, announced store closures due to declining sales.
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Luxury retailer Harrolds also faced financial trouble, having entered voluntary administration earlier this year.
Although Australian Bureau of Statistics (ABS) data showed that January retail sales increased 3.8 percent yearly to $37.07 billion, business lobby groups said that trading conditions remain challenging.
“High rates of crime, the increased cost of doing business, the demand to stay competitive, and the lack of sufficient support from government have created a counterproductive environment for retailers,” said Lindsay Carroll, National Retail Association interim CEO.
“We urge governments to promote policies that encourage digital transformation in small to medium businesses. AI advancements and technology would help vulnerable businesses combat the growing tide of retail crime.”
Fleur Brown, Australian Retailers Association chief industry affairs officer, said cost of living pressures continued to severely affect businesses.
“The Reserve Bank of Australia’s April decision will be crucial in shaping consumer confidence and trading conditions. Whilst interest rate decisions tend to have a lag effect on consumer spending, we are cautiously optimistic we will see some improved trading conditions ahead.”
