Cheap as Chips enters voluntary administration amid funding and competition pressures

Australian discount retailer Cheap as Chips has entered voluntary administration, with Glenn Livingstone, Nicholas Charlwood and Benjamin Ho of WLP Restructuring appointed on 30 December to Palcove Pty Ltd and Waimea Pty Ltd, the entities trading the business.

The administrators have assumed control of the group’s operations while the retailer continues to trade, pending a review of restructuring options and a proposed sale transaction that will be put to creditors for approval through a deed of company arrangement.

Cheap as Chips operates a national bricks-and-mortar footprint spanning South Australia, Victoria and New South Wales, employing more than 500 staff across its store network and head office. The business has been a long-standing participant in Australia’s discount retail segment, having commenced operations in Adelaide in the mid-1980s.

According to the administrators, the appointment follows a sustained period of trading pressure driven by constrained funding availability and intensifying competition from both domestic and offshore discount retailers. While the quantum of the group’s liabilities has not been publicly disclosed, the administrators have indicated that a major creditor has supported the administration and restructuring pathway.

As part of the administration process, a transaction has been proposed under which the Cheap as Chips business would be restructured and acquired by Choice the Discount Store, a competing discount retailer. Under the proposal, the majority of the store network would continue to operate, with a limited number of underperforming locations earmarked for closure as part of a rationalisation of the footprint. Store-level employment is expected to be largely preserved, with a smaller number of redundancies anticipated at head office.

The administrators have confirmed that customer loyalty rewards and gift cards will continue to be honoured on a dollar-for-dollar basis during the administration period, subject to a stated redemption deadline, as they seek to maintain customer confidence and trading continuity.

The administrators said their immediate focus is on stabilising operations, engaging with creditors and employees, and progressing the proposed transaction to maximise returns while preserving the core business and employment base.