The Warrnambool youths, who cannot be named, appeared in front of a bail justice at the city’s police station yesterday and were held in custody after they were found to be at risk of reoffending.

Detective Senior Constable Richard Hughes, of the Warrnambool Criminal Investigation Unit, said the two youths entered the Koroit Street Autumn Nails salon on the night of February 26 and after failing to find cash torched the building, causing about $100,000 damage.

He told the hearing that the business’ operator, Nein Thi Le, was expected to lose thousands of dollars through lost trade.

The contents of the shop were not insured, he said.

Detective Senior Constable Hughes said it was extremely fortunate a passer-by raised the alarm or neighbouring shops in the arcade could have been destroyed.

The two youths, loitering in Liebig Street, were spoken to by police soon after the fire but were not arrested.

Yesterday one of the youths was arrested and during an interview he gave an inconsistent account of what happened on the night of the fire.

The remand hearing was told he later admitted to entering the shop with intent to steal and damaging the premises.

He said they squirted flammable liquid around the shop and claimed his co-offender lit the fire with a stove lighter gun.

The co-accused gave a ‘‘no comment’’ interview.

Neither youth attends school and both were described as extreme risks to reoffend, having been in regular contact with police for previous offending.

Earlier, the bail hearing was told that on February 26 the youths were walking the city’s street when they conspired to break into the salon, entering at 11.30pm through an unlocked rear window.

They ransacked the store, pulling out drawers, but after finding no money set about destroying everything — furniture, fittings and appliances.

Both youths are this morning expected to appear in court charged with arson and burglary.

The fire followed an unrelated blaze at Warrnambool’s Criterion Hotel on February 22 which extensively damaged the Kepler Street pub and led to 13 and 14-year-old youths being charged with offences.