500 jobs at risk as WOW Sight and Sound forced into receivership
THE retail sector has been dealt a further blow with Queensland-based Wow Sight and Sound forced into receivership, placing 500 jobs at risk.
UP to 500 jobs, and a major sponsorship of the state's flagship NRL club, are in jeopardy after local electronics chain WOW Sight and Sound went into receivership yesterday.
It is estimated the business owes unsecured creditors about $25 million. Gift vouchers from the store have been rendered useless but the company said lay-bys would be honoured.
WOW, which specialises in home entertainment systems, computers, car audio, DVDs, games and CDs, operates 15 stores across Australia including 10 in Queensland with more than 500 employees.
Ferrier Hodgson was appointed as receivers to WOW Audio Visual Superstores with its partner James Stewart hoping a white knight may buy the business and secure its future.
WOW's shaky future means the Brisbane Broncos could also be looking for a new sleeve sponsor just a few days out from the start of the NRL season.
WOW has sponsored the club since 2004. However, the club's general manager of marketing and commercial operations, Terry Reader, said they would wait for word from the receivers before deciding whether to remove the sponsorship logo from the jerseys.
Mr Stewart said WOW had been hit by a bad debt of about $20m to a related company, Aristocon Pty Ltd, which collapsed in 2010.
Aristocon is a property arm of the failed SSI Group, associated with WOW founder Sam Savvas, who died at his Brisbane home in May last year.
Aristocon's sole director is Mr Savvas's former business partner, Con Sotiris.
Mr Stewart said WOW Sight and Sound business was suffering from the same depressed consumer discretionary spending being felt by other Australian retailers.
"WOW has been subject to declining sales and profitability, which has escalated in recent months,'' he said.
"We will be seeking expressions of interest for a possible sale of the business as a going concern immediately.''
Mr Stewart confirmed that employees, who were owed more than $4 million, were protected under federal laws.
Product manufacturers' warranties are expected to operate normally.
According to WOW's 2011 financial report, obtained by The Courier-Mail, the company has been struggling since at least 2010. It recorded an $8 million loss last year and a $17m loss in 2010.
Company auditor BDO found the company had breached one of its loan covenants in 2011, leaving it owing $15 million more than it owned in assets.
However at that time, the directors believed the company could continue trading.
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