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Line 7 - Source: ONE News -
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One of New Zealand's most well known clothing brands Line 7 has been put into receivership, blaming increasing costs and a drop in the Kiwi dollar.
The company has provided clothing for crews in the America's
cup, Round the World yacht races and the Olympics, as well as motor
racing gear.
Receivers Kordamentha have closed about a dozen Line 7 shops and
have carried out a stock take of all inventory.
The jobs of more than 100 staff in retail shops and the head office in Auckland jobs are at risk.
Robert Reid, president of the National Distribution Union that represents workers in the retail sector, worries for the future of Line 7 employees.
He says there are no collective agreements in place, and with most individual non-union agreements there is no redundancy pay.
Line 7 began life in 1963, making wet weather clothing for sailors. It was bought out of receivership nearly 20 years ago by owner and director Ross Munro.
Munro told The New Zealand Herald that he had failed to read the market accurately and is blaming himself for the brand's decline.
He said the company did not hedge itself against an aggressive drop in the Kiwi dollar, which impacted margins.
It is understood that most of Line 7's manufacturing is carried out in China.
Business commentator Brian Gaynor says Line 7's position highlights the difficulty for businesses who are not only having to deal with a reduction in demand but also a fluctuating currency, with the dollar's movement being particularly difficult for businesses to call.
"It's easy for us in retrospect to say it was obvious that the dollar would fall then rise again, but in actual fact it is very difficult...and businesses really have to be on the ball these days to make sure that their businesses are sound," he says.
Reid says Line 7's receivership also calls the sustainability of the high mall rentals into question.
"If Line 7 and other shops start to leave the mall, then mall owners will have to do their sums again," he says.
However, he believes the major problem is not increasing costs, but the lack of sales, describing the company's store range over the last couple of years as "ho hum".
Munro also said the company was not quick enough to cut its overheads and customers had been slow to pay their bills.
Receivers say they will rethink Line 7's brand strategy and plan to have sales over the next few weeks.
They say if things go well, it may be not the end of the brand.
