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Napoleon Perdis in liquidation with hundreds of jobs at risk

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“The malls are dead, there’s no foot traffic, everyone’s buying cosmetics online but the landlords don’t want to hear about it,” said Mr Perdis, who has been trying to sell the business for the past 18 months.

“The retailers want to bring in global brands into their stores, but that means a local Australian brand like mine can not compete.”

Meanwhile he said he was sick of bankers and consultants “milking me for money”.

Mr Perdis joins retail veteran Solomon Lew, who controls Just Jeans, Smiggle and other major chains, in slamming landlords as  being out of touch with the market on rent.

One landlord, who declined to be named, said Mr Perdis was visiting landlords close to a year ago to try to negotiate cheaper rent and close some loss-making stores.

“I think as a business they’ve been impacted by Sephora and Mecca, who have strong business models and have rolled out aggressively,” the landlord said.

Considered a “category killer”, Sephora is the world’s largest beauty retailer. It launched into Australia’s $5 billion a year cosmetics and toiletry market in 2014 and now has 17 stores across the country.

Meanwhile, homegrown rival Mecca has more than 90 stores in Australia and New Zealand and has said its sales grew at an average of 45 per cent a year between 2011 and 2016.

Matt Hudson, head of retail leasing at real estate agency Cushman and Wakefield, said the collapse was “surprising, given the strength of the beauty and cosmetic sector… as evidenced by the expansion of the Australian-owned Mecca Cosmetica retail footprint”.

Napoleon Perdis has been in a financially precarious situation for several years, running at a $1.6 million loss in 2014 and a $154,808 loss in 2015, corporate documents show.

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The company’s 2015 accounts, the most recently available, show it had total sales $83 million that year, which was down from $92 million a year earlier.

Its current liabilities that year exceeded its current assets by $3.8 million, after its banks called in their loans due to a breach of a covenant. The loans had to be renegotiated.

Mr Perdis put an “enterprise value” of $35 million to $45 million on the company, but admitted it had suffered  significant blows recently including the brand’s departure from Myer over Christmas.

Napoleon Perdis entered an exclusive supply deal with Priceline pharmacies in August last year, and Priceline has pledged to continue to stock its products through the administration.

Documents lodged with the corporate regulator list Priceline’s owner, Australian Pharmaceutical Industries, as a creditor alongside the ANZ Bank and landlord Stockland.

Napoleon Perdis expanded into the US in 2004, and was stocked in high-end department stores including Bergdorf Goodman, Niemen Marcus and Nordstrom, but pulled out of that market in 2015 after being unable to turn a profit.

Worrells partner Simon Cathro said he would be seeking buyers or investors for the company, and expected “significant interest”.

Napoleon Perdis stores were closed on Thursday while staff counted remaining stock, and will reopen on Friday.

The company had more than 600 employees in 2015, but administrators could not confirm the company’s headcount on Thursday.

The company was dragged to the Federal Court last year by his former right-hand man, who alleged he had been underpaid by nearly $100,000.

Former general manager Giovanni Rosiello also alleged he was forced to perform an exhausting range of tasks outside of his job description – including organising family funerals and boosting the Instagram profiles of Mr Perdis, his four children and his brother.

That dispute is ongoing, and was set for a first case management hearing in Sydney on March 8.

patrick.hatch@smh.com.au

Andrew Hornery is a senior journalist and Private Sydney columnist for The Sydney Morning Herald.

Carolyn Cummins is Commercial Property Editor for The Sydney Morning Herald.

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