Australia's PE-owned Tigerlily enters administration

"In the past fortnight, it had accelerated in terms of the tightening of the retail space and [the effect on] sales," Scott Langdon, a partner with the administrator KordaMentha, said according to The Sydney Morning Herald, noting that COVID-19 was the “core reason” for the collapse. "It reduced the number of people coming through shopping centers, which reduced sales in an already challenging environment."

Crescent acquired Tigerlily from sportswear retailer Billabong in a deal worth approximately $46 million with a view to marketing the company’s Australian outdoors image in Asian and global markets. This effort included a 20th-anniversary rebranding campaign late last year that combined a new online advertising strategy with an e-commerce relaunch and new apparel collections targeting international markets in 2020.  

Stresses within the company were made evident soon after confirmation of the plan, however, with CEO Chris Buchanan and CFO Steven Hill leaving this business in February. Details regarding the circumstances of the departures have not been made clear, nor has the cost of the rebrand and product portfolio expansion. Recent years have seen a scaling back of the store network, which currently stands at 30 locations.  

Tigerlily is said to be the 10th major retailer in Australia to either go bankrupt or close a significant number of stores as a result of digital disruption. Its administration is the first such episode attributed directly to COVID-19. The company is expected to continue trading during the search for a new buyer with a further reduced store network. 

Private equity investors are facing significant challenges as the coronavirus outbreak slows investment, exit, and fundraising activity while simultaneously impairing portfolio company performance and valuation. At the portfolio level, cash conservation and improved efficiency in productivity have emerged as priorities. 

Given the quarantining measures in place in many jurisdictions, including Australia, online retail is considered more resilient than brick-and-mortar. However, the relative advantage remains subject to the level of dependency on third-party logistics providers that may also be operating at reduced capacity.

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• Topics
• Australasia
• GPs
• Consumer
• Write-off
• Australia
• Crescent Capital Partners