Radio Rentals will permanently shut all shop locations across Australia and make approximately 300 staff redundant, as the appliance and electronics lender becomes the first major retail casualty of the coronavirus-fuelled downturn.
ASX-listed parent company Thorn Group on Thursday said it had made the “hard decision” to permanently close 62 Radio Rentals stores and selected warehouses as COVID-19 continues to melt consumer sentiment.
The core of the Radio Rentals’ business will continue to operate and will be leveraged to develop a new, digital business model.
“I am disappointed that we have been forced to make hard decisions regarding our staff and store network, however they have had to be made to ensure Thorn Group continues to operate and thrive in the future,” Thorn chief executive Peter Lirantzis said in a release to the ASX.
Radio Rentals started closing stores earlier this month and retailers across the nation made similar moves to absorb the blow of coronavirus restrictions and a subsequent drop in revenue.
Listed companies including Myer, Kathmandu, Accent Group, Lovisa, Michael Hill Jeweller and Premier Investments – which runs Smiggle, Peter Alexander, Just Jeans, Portmans and Dotti – temporarily closed their doors and stood down thousands of staff.
The permanent Radio Rentals store closures and the resultant redundancies of about 300 casual and full-time staff at the outlets and head office will be undertaken over the next three months.
Mr Liranzis said the firm intended to redevelop the Radio Rentals’ digital business model and Thorn Business Finance once the COVID-19 crisis had passed.
The company said adverse business conditions created by the COVID-19 crisis were causing increased arrears in Radio Rentals and Thorn Business Finance and would result in corresponding write-offs.
“These conditions are expected to continue to create a range of challenges and complex conditions for the Thorn business over coming months,” the company said.
Thorn will undertake the run-down of Radio Rentals’ loan book, worth about $123 million as at March 31, which it says will be value-creating and will not draw down capital.
The run-down is expected to immediately generate significant cash, above the redundancy and other costs.
Shares in the company shot up nearly 30 per cent to 10.5 cents by 1123 AEST.
Thorn Group has still lost 55 per cent of its value in 2020 against a 21 per cent downturn for the wider ASX/200.
The number of Australian with a jobs has fallen by 6.0 per cent since the start of the coronavirus crisis began, with younger people suffering the worst losses.
The Reserve Bank expects unemployment to hit 10 per cent in the coming months, nearly double the 5.2 per cent rate before the outbreak.
-with AAP
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