‘Unavoidable’: Blow as major franchisee of Priceline on verge of collapse

More than 30 Priceline pharmacies across Australia could close as a rescue deal to bail out its largest franchisee has reportedly fallen through.

Retail giant Wesfarmers has reportedly walked away from a rescue plan for Priceline’s largest franchisee – Infinity Pharmacy Group – which owes more than $400m.

The Australian conglomerate that owns Bunnings and Kmart acquired Priceline operator Australian Pharmaceutical Industries (API), in a $774m deal in 2022.

While Wesfarmers does not directly own Infinity Pharmacy Group, it is the parent company of the Priceline banner, which Infinity was a major franchisee for.

Wesfarmers was set to inject equity into Infinity Pharmacy group before abruptly ending the arrangement the week before Christmas.

The business was placed into administration with KPMG Australia’s George Georges, David Hardy, Gayle Dickerson and Will Colwell appointed as receivers on December 17.

This put 56 Infinity pharmacies into administration, and Infinity subsequently appointed voluntary administration to 36 pharmacies in its network.

In a statement from Priceline chief customer officer Richard Pearson sent business owners, confirming the collapse was due to aggressive acquisition of new pharmacies via expensive, high-interest rate debt.

“This expansion came at the expense of Infinity meeting its financial obligations, including not paying us and various other creditors, to supply products,” Mr Pearson wrote.

Mr Pearson also said the decision to close the stores was not taken lightly.

“The receivers and voluntary administrators have been operating Infinity’s stores for nearly a month, and I am pleased to report the stores are running well with stock on the shelves, team members being paid and importantly, customers receiving a high level of service,” he said.

There are no current job losses from the administration and receivership with all current employees retained and paid through the process.

At the time, Wesfarmers Health chief customer officer Richard Pearson called it “unavoidable”.

“As many of you are aware, we have worked tirelessly with the Infinity Pharmacy Group (Infinity) over many years to support them to trade through significant financial challenges,” he wrote in an email to Priceline franchise partners.

“Despite these efforts, Infinity’s failure to meet their financial obligations over a prolonged period, as well as their worsening debt position, has placed them in an untenable situation, threatening their ability to continue trading.

Infinity Pharmacy owed more than $110m to Wesfarmers, while three of the four major banks are reportedly owed more than $145m, according to reports in the AFR.