Receivers for the Colorado Group plan to close 140 underperforming stores as part of a proposal to improve the business.
The shutdown will lead to job losses for 1,042 staff at outlets such as Mathers, Williams, Colorado, Diana Ferrari and JAG.
Brendan Richards, receiver at Ferrier Hodgson, says while the job losses are not desirable the closures are necessary to improve profitability.
“The restructure of the group would eliminate the loss-making Colorado-branded stores and those other stores impacting on the profitability of the group,” he says.
“The remaining brands and stores are all profitable and would form the cornerstone of the future business.”
It is expected the Colorado Group will deliver EBITDA of about $19 million for the 2011 financial year with profitability set to increase after stores close.
Profitable brands Diana Ferrari, JAG, Mathers and Williams will become the financial centre of the restructured group. If Colorado does close, its brand of footwear will continue to be available online and at 200 Mathers and Williams outlets.
No further store closures are expected.