Aca Joe owner placed under liquidation

Platinum Holdings chairman Marcel Joubert and MD Moira O'Reilly in front of one of the three Waterfront shops ordered to close by the Cape High Court last week. Image credit: Sunday Times

The company has failed to grow turnover in a tough consumer environment in which spending is under pressure.

The influx of global fashion retailers to the local market - including Zara and Cotton On - and slicker local rivals, such as The Foschini Group and Woolworths' Country Road, have eroded the relevance of the Platinum Group brands in recent years.

The group has 59 stores across the country, with an estimated turnover of R400m.

According to two reports published on 30 July, the Platinum Group ran into severe cash flow problems earlier this year as its turnover could not support obligations. In the past three months the company has run existing stock down to the extent that there is hardly any merchandise in its shops.

Many of the group's stores around the country have been shut, including those in Sandton City and the Zone in Rosebank.

While mall owners, including the Liberty Group, declined to comment, it is believed that some of the Platinum Group's stores were vacated after eviction orders were enforced following the expiry of their leases.

Hyprop Investments - which owns Hyde Park Corner, Canal Walk and Clearwater Mall - told Business Day it was taking legal action against the Platinum Group because of a contractual breach.

"We are in the process of taking the matter to court," the listed property investment group said.

E-mails and calls for comment to Platinum Group CEO Marcel Joubert went unanswered.

Equity analyst at 36One Asset Management Daniel Isaacs said: "You can't just hide behind the brand without investing in it and reinventing it every couple of periods. To have a successful brand, you have to provide newness."

The Platinum Group was earlier this year accused of owing R7.5m in overdue rent to Rebosis Property Fund's Hemingways Mall.

But it is unclear whether the group's creditors have appointed administrators.

"I don't think someone would want to buy soft brands at the moment. I don't think it's an attractive asset, with the amount of investment you would have to put into it," said Isaacs.

In March 2012 the Platinum Group opened five stores in Mauritius in what it said was the "perfect launch pad" for its future expansion into Africa, the Middle East, UK, Europe and other promising international markets.

Independent analyst Syd Vianello said: "A lot of Platinum's problems are that its brands didn't change with the times. With innovation and brands coming into the South African market, people want something new. If you take Hilton Weiner, that white linen look lost favour with shoppers, as did Aca Joe. With all these global brands and more to come, if you are not up to date, you're in trouble."

The Platinum Group released a statement on Friday afternoon stating that reports of the liquidation were wholly incorrect. "Although there is certainly pressure, no part of group is in liquidation and reports to the contrary are misguided."

The Platinum Group said the executive recently elected to initiate structured business rescue proceedings to protect the affected stores and parts of the group.