CEO Pete Lirantzis says Thorn will 're-enter business finance'
While most companies in the financial services sector are coming through COVID in better shape than they could have anticipated, consumer and business finance company Thorn Group has felt the full force of the pandemic and now faces an uncertain future.
Thorn’s revenue fell 49 per cent to A$104.1 million in the year to March 2021, as its Radio Rentals business struggled and high arrears forced its business finance division into run-off.
In April last year Thorn responded to COVID by closing all 62 Radio Rentals stores, saying its focus was on the health and safety of customers and staff.
A few weeks later it announced that the closures were permanent and that the business would be online only in future. It retrenched 300 staff.
The result was that the number of units installed by Radio Rentals in the year to March was down 93 per cent to 5346 units. The division’s revenue fell from $162 million in 2019/20 to $70.7 million.
In the business finance division, the 30-day arrears rate blew out to 36.6 per cent last July, breaching one of the compliance parameters of its warehouse. The warehouse is in run-off and Thorn has stopped originating business finance.
Yesterday, the company reported that the 30-day arrears at the end of March were 8.6 per cent, which is still in breach.
With the reduction and then cessation of origination and the impact of COVID, the value of business finance receivables fell from $323.4 million to $192.5 million during the financial year. Revenue fell 20 per cent to $33.4 million.
Thanks to a big reduction in operating expenses, the company made a profit of $8.4 million and improved its cash position. It declared a dividend.
Thorn chief executive Pete Lirantzis said in a statement: “We have started a journey to remediate and recalibrate Thorn’s operations, to transform our traditional bricks and mortar consumer model to a digital pure play operation and to re-enter the business finance segment with a digital first business model.”
Lirantzis said the company has improved its collections capability.
He conceded that the new digital strategy “was not without risk”.