Chic shareholders throw in the towel

Cape Town (SA) – Chic Shoes' shareholders decided last Monday to place the company in voluntary liquidation - the same day we reported that turnaround practitioner JJ Oosthuysen was seeking creditor buy-in for a strategy to trade out of its situation.
       The company will close on Wednesday (January 31).
       "The company had multiple challenges and at the end it proved to be too much," he said. "Business model design is key to the success of any business, especially in the footwear and textiles sector where they face severe competition from low cost imports.
       "Planning for an event or a business strategy implies a certain set of assumptions to be adopted. These assumptions include aspects such as payments to be collected by a certain date, bank balances to be at a certain level, suppliers to release components on credit etc. Once the word is out on the streets that a company is in trouble, everybody pulls back to contain their exposure and risk. These include stakeholders such as customers (supplier failure risk), suppliers (credit risk) and staff (salary risk) etc. Once this happens, everything planned falls flat and alternative plans need to be generated.
       "The reasons for failure relate to the company’s chosen business model that did not deliver the desired profitable business results, meaning, the finance structure and high gearing, the management and governance model, the sales and product distribution model, unprofitable customer base, high input costs (materials and labour), exposure to foreign currency exchange rates, efficiencies on the factory floor, waste management etc all contributed to the failure of the business."
       He said he expected liquidators to be appointed within 2 or 3 weeks.