SYDNEY -- Darrell Lea, the privately owned confectionary retailer, has been placed into receivership after 85 years in business.
Insolvency firm PPB Advisory has been appointed as voluntary administrator. PPB's Mark Robinson said the firm would undertake an urgent review of Darrell Lea with a view to selling the business as a going concern.
With Woolworths (ASX: WOW.AX), Wesfarmers (ASX: WES.AX) subsidiary Coles, Metcash Limited (ASX: MTS.AX), and other supermarket operators like Aldi offering similar products to Darrell Lea for lower prices, it's perhaps no surprise that the company has gone into receivership.
With a vertically integrated model, Darrell Lea captured more than its fair share of the margin. In some ways, the company mirrors Billabong International (ASX: BBG.AX), as Billabong expanded into retail from manufacturing. But both companies now have their issues. Despite its exclusive products, Darrell Lea has been unable to perform in the face of low-priced competitors and weak consumer sentiment that has shoppers unwilling to pay a premium for its products.
The Australian confectionary industry is dominated by Nestle and Kraft. Given that the major retailers have a market share greater than 90%, both Nestle and Kraft may have been willing to accept lower prices for their products.
The Foolish bottom line
Whether PPB Advisory will be able to sell Darrell Lea as a going concern is debatable. The ferocious price war between the big supermarkets appears to have eliminated Darrell Lea, and one wonders: Who's next?
If you're in the market for some high-yielding ASX shares, look no further than our "Secure Your Future with 3 Rock-Solid Dividend Stocks" report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.
More reading
