Failed fashion chain Andrea Moore & Co 'significantly overstated' value of inventory by $3.3M
By Jonathan Underhill
March 16 (BusinessDesk) - Andrea Moore & Co, the clothing chain that failed in January, "significantly overstated" the value of inventory on its balance sheet
and in its stock system, according to receivers McGrathNicol.
Directors Andrea Moore and partner Brian Molloy had attributed the demise of the women's fashion retailer to large-scale
construction and traffic roadworks outside five of its seven stores and the late delivery of a significant amount of
stock.
The company was incorporated in 2004 and in 2016 raised $750,000 in equity capital through crowdfunding platform
Snowball Effect. At the time it said 2016 revenue was $4 million and pre-tax earnings were $300,000, while for 2017,
revenue was forecast to grow to $4.8 million and ebitda to $600,000. The funds raised were to be used for working
capital and fund its expansion, including selling its I AM range in 30 Farmers stores.
The report from McGrathNicol's Andrew Grenfell and Conor McElhinney said the receivers had kept the stores open while
advertising Andrea Moore for sale but failed to elicit any offers. As a result, they had focused on selling stock and
rationalising trading operations. Six of the seven stores have been closed by the receivers and the remaining store and
online platform will close by March 31, they said.
Moore and Molloy appointed liquidators on Jan. 8 and the same day Bank of New Zealand, owed $601,336, appointed
receivers under the terms of a general security agreement. A search of the Personal Property Securities Register at the
date of receivership showed eight parties, other than BNZ had a registered financing statement against the company, the
receivers said. Preferential creditors - employees and Inland Revenue - were owed $186,688.
The company had won an "Excellent Customer Service" award in 2013 at the BNZ Business Awards.
The receivers said they undertook a count of stock units in the stores and uplifted stock at third-party locations.
"On appointment, it was identified that the book value of inventory provided for in the company’s accounts and stock
system was, and had been for a period of time, significantly overstated," the receivers said. As per the balance sheet
at Dec. 31, stock was valued at $3.8 million and valued at $2.7 million in the company's stock system on Jan. 9, which
showed 31,373 stock units. The receivers' stock take on appointment found 7,900 units valued at $538,000, or a $3.26
million overstatement compared to the Dec. 31 accounts, they said.
The directors had cooperated fully with the receivers, they said.
Last week Andrea Moore, who was the designer for the company, thanked all those who had supported her brand, saying on
her Instagram account that "it's been very inspiring for me to work through this process with grace, energy and
attention to detail." She also thanked online customers for their patience.
Online orders were taking longer than usual "due to an overwhelming response to the receivership," the company says on
its website.
(BusinessDesk)