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Stuttafords: Mixed reception for consignment plan

Published: 27th Feb 2017
Author: Tony Dickson - S&V Editor

Johannesburg (SA) – Stuttafords’ creditors will meet next Monday to hear progress on efforts to rescue the company. In the meantime, they’re being encouraged by business rescue practitioners Neil Miller and John Evans of Mazars to accept 1 of 2 alternative plans to restock the company: a consignment agreement, or an agreement for the sale on credit of product to Stuttafords on 120 days’ credit, with reservation of ownership.

        Creditors spoken to varied in their response:

Though critical of the lack of an agreement on the way forward, Laurence Lotzoff, MD of Hush Puppies distributor Dale Footwear, which is owed R2 340 723, said he would “support the consignment stock option”.
        He said he believed most of suppliers would accept the consignment option, “because it’s essentially risk-free for all parties. I’m keen to continue trading with Stuttafords to be able to mitigate some of my loss.”
        He said Stuttafords’ 12 stores would be “difficult to replace” for Hush Puppies.
        However, he was critical of “the differences of opinion between the shareholders which seem to have an adverse affect on management's ability to lead with confidence”.
        “They’re not generating confidence among suppliers. If they leave it much longer, it won’t be possible for them to get stock, and without that, they can’t trade.”

        Stan Kotkin, MD of Footwear Trading, which is owed R4 755 083, said the company had been supplying Stuttafords on consignment “for years”, and that he would be happy to continue “should the company come out of business rescue and continue operating”.
        “We’re geared up to do it, and it’s worked well for us – so much so, that we have our own staff in their stores because we felt they would be more effective.”

        Dangee Carken, which is owed R680 429, wouldn’t support either option “under the current circumstances”, MD Robby Stoller said.
        “My business isn’t geared to the consignment option, or to filling in small quantities. As far as the other option is concerned, it doesn’t address what they already owe. It’s a deal which favours Stuttafords, not the creditors.”

        Falke Eurosocks is owed R498 999, and has been made an offer, CEO Martin Grobbelaar said.
        “With regard to the consignment suggestion, it would give them room to manoeuvre, but we feel the bigger problem is with their business model.
        “Globally, chains are under pressure, with consumers opting for specialised independents. In Stuttafords’ case, we feel they have lost their relevance in the market, and they need to reinvent themselves if they are to succeed.”

        At Kaytex Belt, owed R212 507, marketing director Zahir Kader said the logistics of consignment stock were unattractive to the company. “The cost of the paperwork to delivery small quantities just isn’t worth it,” he said.

*All amounts quoted are from a list of creditors provided to creditors by the business rescue practitioners. It lists a ‘claim amount’ and an ‘amount per Stuttafords’. The figures quoted are from the ‘claim amount’. These figures were as of the date Stuttafords went into business rescue, and are no longer accurate in all cases.

This partial list of creditors includes companies which supply footwear, leather goods or hosiery as part or all of their business: Adidas (R1 347 619), Apollo Brands (R1 647 375), Asics (R690 498), Barker division of Bolton (R721 034), Dreamworks (R301 347), Florsheim (R499 650), Glencarol Industries (R565 426), GSM Trading t/a Billabong (R179 327), Interbrand (R972 987), Intershu Distributors (R682 021), Intobrands (R12 918), JCE Industries (R808 819), Medicus (R259 294), Musgrave Agencies (R1 961 858), New Balance (R676 883), New Pier Trading (R299 693), Olympic-Flair (R373 725), Polo Distribution Division of Carter Harris (R10 948 360), Puma Sports Distributors (R2 179 974), Reviva Technology – Hurley (R370 120), Skye Brands consignment (R273 865), Skye Distribution (R320 688), The House of Busby (R6 374 346), The Scottish Knitwear Group (R13 463 420), Tommy Hillfiger (R14 617 819), Trail Terrain (R439 848).

©2017 S&V Publications
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