Jeanswest has entered voluntary administration but the Warrnambool store will stay open for the time being.
The Australian-founded fashion retailer has had administrators appointed, but will continue to operate as normal while options are considered.
There are 146 Jeanswest stores across Australia, including the Warrnambool store in the CBD Target Centre, with 988 employees.
KPMG partner and administrator Peter Gothard said Jeanswest would continue to operate while the administrators conducted an urgent analysis of the business.
"The administrators will be looking at all options for the restructure or sale of this established Australian retail business and are seeking urgent expressions of interest from parties interested in acquiring or investing in the business," he said.
KPMG's James Stewart said Jeanswest had faced tough market conditions and pressure from online competition.
"The administration provides an opportunity for Jeanswest to restructure so as to better respond to the challenging Australian retail market," he said.
Creditors will meet later this month.
The news comes after Harris Scarfe entered receivership in December.
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