Harris Scarfe considers $120 million IPO a decade on from collapse

Harris Scarfe says it is confident consumers will continue to focus on value, as the big-box specialty stores group readies for a potential $120 million sharemarket listing later this year.

Chairman Kevin Jacobsen says while retailers are going through a difficult time, Harris Scarfe has weathered the storm better than its competitors and has “grand plans to expand.”

Jacobsen, managing director of corporate advisory firm Momentum Corporate, described Harris Scarfe as a “value-based retailer in the post-GFC environment.”

“A lot of people have moved downward to look for value-based products,” Jacobsen told SmartCompany.

Comparing Harris Scarfe to German supermarket giant Aldi, Jacobsen said while Aldi was 100% private brands, only one-quarter of the local retailer’s products are the same.

“It’s basically a house of brands,” he said.

Harris Scarfe will decide by the end of June whether to proceed with a $120 million listing, with half of that figure earmarked for new stores and small acquisitions.

And following the high-profile collapse of private equity-owned clothing group Colorado and book giants Borders and Angus & Robertson, he stresses that Harris Scarfe is not a private equity business and is instead backed by a syndicate of high-net worth individuals. Momentum investors own the bulk of Harris Scarfe.

A listing would cap a remarkable corporate comeback for Harris Scarfe, which collapsed in April 2001 with more than $140 million debt. Investigations would later reveal management had kept two sets of books, one with the true state of affairs and one with inflated profit figures.

Jacobsen says that while “investors will clearly have a recollection of what happened” today’s Harris Scarfe is a “substantially different business” to the group that spectacularly collapsed a decade ago.

While the Harris Scarfe of 2001 was essentially a department store trying to compete with David Jones and Myer, Jacobsen says it now solely focused on womenswear, menswear, homewares and manchester.

Harris Scarfe intends to target the metropolitan Sydney, Queensland and West Australian markets, having opened up six new stories in Melbourne over the past 2.5 years.

Jacobsen adds that its aggressive expansion plans give it more growth potential than DJs and Myer, and Harris Scarfe is helped by its ‘format flexibility’, which allows it to fit into homemaker centres as well as department stores.

Harris Scarfe, which opened in 1849 in South Australia, has more than 40 stores across Australia.