For much of the past year, Jan Cameron, formerly Australia’s fourth richest women, has been battling her creditors and suppliers as the business she bought out of insolvency in 2009 went back into it.
On Monday, ahead of possible litigation by creditors, Cameron broke her silence in an interview with The Australian Financial Review. She said she was being unfairly targeted, painted as the villain because the administrators had “nothing to lose” by going after her. She claims they are pursuing her far more aggressively than they have private equity firms in the past, who could cut them off from further work if they pushed too hard.
The most interesting revelation to come out of her interview was this: of the $247 million she gained by selling her stake in Kathmandu in 2006 (Cameron founded the company in 1987), she’s spent $215 million trying to keep Retail Adventures — the owners of Go-Lo, Sam’s Warehouse, Chickenfeed and Crazy Clark’s — afloat.
It’s been a staggering waste of money, not helped by the company being put into voluntary administration last year as it struggled to pay rent on its stores, leaving many workers locked out and bewildered about whether they still had a job.
Cameron bought the company out of insolvency for the second time in February this year, and managed to win a creditors vote granting her control of the business earlier this month. The deal, which promised creditors between five and six cents for every dollar owed by the company, will see just $5.5 million returned to creditors of the $114 million owed by Retail Adventures. This led administrators Deloitte to argue creditors should reject the deal, but a majority voted for it anyway.
But Cameron’s hard work isn’t over yet. The company is still in dire straits, and has embarked on a cost-cutting program to try to make the business work, one Cameron admits she should have started earlier.
It’s a monumental change of fortune from 2009, when Cameron first bought Retail Adventures. She said at the time it would be a “difficult feat for a company like this to lose money”. Retail Adventures after all was meant to be her golden goose, with the proceeds going towards funding her activism.
“In 2009, the $85 million sale of Retail Adventures was considered ‘the bargain of the decade’ for Cameron. In retrospect, it was a ridiculously generous price.”
In 2011, Cameron, along with Wotif founder Graeme Wood, was one of several Tasmanian millionaires who contributed $10 million towards buying the controversial Triabunna native forest woodchip export mill from Gunns, with plans to turn it into an eco-resort. In 2009 she said she gave around $20-30 million to charity every year, including all the profits from Chickenfeed, which she picked up when she bought Retail Adventures.
But that well of profits has dried up, as Retail Adventures itself increasingly calls upon Cameron’s funds. The question is how on earth Cameron — who’s previously built and sold two successful retail businesses — managed to find herself in such a situation.
In Fin chat, and in another last year with The Weekend Australian, Cameron has been willing to admit her mistakes. She says she didn’t know enough about the cutthroat world of discount retail, her retail experience having come from high-margin businesses like Kathmandu (which incidentally posted stellar profits yesterday). She’s also blamed many in the business, telling the Oz last year that some in Retail Adventures are resistant to change and willing to bleed her dry.
And the global financial crisis didn’t help. Many had no idea how long retail would be subdued. In 2009, the $85 million sale of Retail Adventures was considered “the bargain of the decade” for Cameron. In retrospect, it was a ridiculously generous price.
Cameron bought Retail Adventures without its debt, but continuing losses have pushed it back into the red. From 2010-12, the business racked up $144 million in losses, according to the AFR.
If Cameron isn’t successfully sued by her creditors, many of whom are taking legal action to wind the company up, she has another chance to turn this business around and salvage some of her fortune. This time, no doubt she, along with everyone else, realises how difficult that will be.
“She says she didn’t know enough about the cutthroat world of discount retail, her retail experience having come from high-margin businesses like Kathmandu ”
Well,er, yes. IMHO if you’re only competing on price in retail your pushing the smelly stuff uphill.