Mosaic & Star Stand Down Staff, Wesfarmers Shutters Kmart NZ

Major women’s fashionwear retailer Mosaic Brands has become the latest chain operator to shut stores and stand down staff indefinitely, announcing on Wednesday it was unable to keep stores open following the government’s social distancing mandate.

Mosaic, which owns brands such as Noni B, Rivers and Katies, told investors on Wednesday morning it would suspend all store operations from Thursday onwards as sales across Australia’s retail sector continue to steeply decline.

At the same time Wesfarmers is shutting its Kmart outlets in New Zealand and closing its Bunnings stores in the same country to retail customers, but remaining opening to deal with building and construction trades.

The announcements came a day after the Michael Hill jewellery chain announced the closure of 300 stores across Australia, New Zealand and Canada in response to the global crisis.

In a statement, Mosaic said “The Group has recently seen a significant drop in store traffic and revenue, a direct result of the community’s response to the COVID-19 outbreak and the Government’s ‘social distancing’ recommendations.

Some 6,800 employees will be stood down across the business’ 1,379 odd stores with access to leave entitlements while the company reviews what government support may be available.

The store closures start tomorrow.

“The health and wellbeing of the Group’s customers, team and broader community are paramount,” the statement reads.

“The Group’s personal service mandate, which it prides itself on, conflicts with the Government’s ‘social distancing’ recommendations,” Mosaic said in the statement.

The shares fell 23.3% to 23 cents

Wesfarmers has shut its Kmart stores in New Zealand as the coronavirus outbreak continues to escalate.

Wesfarmers told the ASX yesterday that the 25 New Zealand Kmarts would shut for four weeks from midnight last night following the government’s new restrictions on “non-essential services”.

But Wesfarmers said Bunnings will keep its 53 New Zealand stores open to trade to customers but will be closed to the general public during this period.

But for now at least, Wesfarmers’ Australian stores under the Bunnings, Kmart, Target and Officeworks banners will remain open.

“At this stage, state and federal government measures in Australia do not require the closure of retail stores,” the statement reads.

“Bunnings, Kmart, Target and Officeworks stores across Australia are operating under standard or near-standard trading hours and operations continue in the Group’s industrial businesses.

Wesfarmers shares were up 5.4% at $33.41.

And in a separate development the competition regulator, the ACCC has okayed the proposed acquisition of Jewel Fine Foods (in voluntary administration) by Coles Group.

Sydney-based Jewel Fine Foods (Jewel) has been in voluntary administration since April 2019, makes a range of branded and private-label chilled ready meals. Coles does not currently manufacture these products, but is Jewel’s major customer. Jewel also supplies other chains.

In September 2019, the ACCC knocked back an attempt to sell Jewel to B&J City Kitchen, a rival operator in the sector on the basis that it would be likely to substantially lessen competition for the supply of chilled ready meals.

“Coles’ acquisition of Jewel ensures that there will still be two major suppliers of chilled ready meals,” ACCC Commissioner Stephen Ridgeway said in a statement yesterday.

“We are pleased that the administration process will end with Jewel’s business continuing as a going concern and competing with other suppliers.”

“The ACCC investigation focussed on whether other retailers would be foreclosed if Coles acquired the business. We found that Woolworths already has supply arrangements with Jewel’s competitor, B&J City Kitchen, and that other retailers have other options,” Mr Ridgeway said.

Information available to the ACCC indicated that without a going concern sale to Coles, the next best alternative for Jewel’s administrators would likely be liquidation of the assets.

“The continuation of Jewel’s production of chilled ready meals is a better outcome for competition than liquidation of the assets,” Mr Ridgeway said.

“The ACCC investigation commenced before the current increase in demand for groceries. However we consider our decision remains appropriate.”

Coles shares rose 3.1% to $16.65, not because of this dea, but because of the overall rebound in the market.

Casino operator, Star Group yesterday stood down around 90% of its staff of 9,000.

Its casinos Sydney, the Gold Coast and Brisbane have been seriously impacted by the ban on social gatherings, and around 8,100 jobs are affected, including senior management.

The company will provide two weeks of paid pandemic leave and workers will also have access to annual and long service leave entitlements.

“The board and senior management will also forego a significant percentage of entitled directors’ fees and salaries respectively,” the company said. Further details are to come in the near future.

Viva Leisure has closed all its gyms and cancelled the casual shifts of 800 staff.

Non-essential permanent Viva staff have been placed on either paid or unpaid leave and redundancies have been offered for some permanent roles not required during the shutdown period.

Funeral operator Invocare also said it was implementing contingency plans now that funerals have been limited to 10 people.

Invocare said it has live streaming and recording facilities at many of its locations.

Dominos Pizza’s will be closing its New Zealand stores in light of the country’s COVID-19 measures. It joins Wesfarmers which is taking similar action in NZ.

Southern Cross Media has entered a voluntary trading halt has it gauges the impact of COVID-19 on its operations.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →