A beloved discount retailer with over 500 employees has been rescued from administration in a deal that will see its brand and most of its stores continue to operate. Cheap as Chips, which runs 47 stores across South Australia, Victoria, and New South Wales, has been sold to its competitor, Choice the Discount Store.
A Lifeline Deal and Store Closures
Administrators from WLP Restructuring Partners confirmed the sale, which will more than double Choice's current footprint of approximately 35 stores. Under the proposed agreement, Cheap as Chips' parent company, Palcove, will be restructured. While 44 stores are set to remain open, three locations will close permanently: Albury in New South Wales, Wonthaggi in Victoria, and Windsor Gardens in Adelaide.
Administrators Glenn Livingstone, Benjamin Ho, and Nicholas Charlwood have taken control and stated that trading will continue while the sale is finalised. In a significant relief for staff, WLP confirmed that all store employees will be retained after the sale. However, there will be a 'small number' of redundancies at the head office level, with no further store closures expected.
Challenges and Creditor Vote
The collapse followed a 'challenging trading period' for the retailer, with administrators pointing to cash flow constraints and intense competition from both local and international rivals. The exact amount of outstanding debt remains unclear at this stage.
The retailer's future now hinges on a creditor vote scheduled for January 12. Creditors will decide on the proposed deed of company arrangement, with the major creditor reportedly backing the restructure plan. Mr Livingstone stressed that the immediate priority is ensuring continuity of operations and employment while examining the transaction details.
Customer Advice and Sector Shake-up
Administrators have urged customers to use their loyalty perks promptly. The company will honour its 'Chippie Rewards' loyalty benefits and gift cards on a dollar-for-dollar basis only until January 31. 'We encourage all customers to redeem these rewards before they expire,' Mr Livingstone said.
This acquisition marks another significant shift in Australia's competitive discount retail landscape. It follows the $259 million takeover of The Reject Shop by Canadian giant Dollarama earlier this year. Cheap as Chips, a favourite among bargain hunters since it first opened in Morphett Vale, Adelaide, in 1985, will now continue under new ownership.
'We look forward to working with all parties to finalise the restructure and enable the restructured business and the majority of employees to continue successfully into the future under Choice ownership,' the administrators concluded.
