July 12, 2024

reydetallarines

Technology and Age

Everything You Need To Know About Missguided’s Collapse Into Administration

Is it the end of the world (of fast fashion) as we know it?

This week, Manchester-based fast fashion e-commerce retailer Missguided collapsed into administration.

It’s understood that the brand, which reportedly employs over 330 people, has called on third-party administrators Teneo Financial Advisory to sell the business and its assets.

It’s not the first time that a brand has fallen into administration. In fact, some of Australia’s most luxurious labels have faced their own administration woes, including Oroton in 2017 and Alice McCall in 2020.

However, the news of Missguided’s collapse is an unprecedented event that is set to shake the bedrock of the industry.

Missguided still remains open for trade while a buyer is being sought. Teneo’s Managing Director, Gavin Maher, claims that the brand has “a high level of interest from a number of strategic buyers”, it’s unclear what the future of this once dominating brand will be.

Of course, for slow fashion and sustainable advocates, this news is like Christmas coming early.
But what led to this collapse and does Missguided’s trajectory signify a valuable lesson about the longevity of fast fashion? Below, ELLE Australia breaks down everything you need to know.

What Happened To Missguided?

Missguided was once the pinnacle of a ‘rags to riches’ success story for founder Nitin Passi. As per Missguided’s 2019 Modern Slavery statement, the brand accumulated a £215 million dollar turnover (approximatly $337 million AUD) in that year alone.
However this fortune was amassed off the back on unethical business practises. Australian fashion ethics watchdog Good On You, Missguided’s environment rating is “very poor” (it releases up to 1000 new products every week), and so is the transparency of its labour practises. And that’s not even touching the issue of intellectual copyright, which the brand has flagrantly disregarded. (In 2019, it was ordered to pay Kim Kardashian £2.1 million in damages for using her name and image without permission.)

Despite this, Missguided only grew in popularity and notoriety thanks to celebrity endorsements from the likes of Sofia Richie and marketing stunts like the launch of a $1 bikini.

Sofia Richie’s Missguided campaign.
Increasing awareness about the environmental impact around fast fashion, including their contributions to textile waste, has led many consumers to be demystified about the allure of purchasing garments that may remain in landfill for centuries.

In 2021, Missguided was saved from collapse by Alteri Investors. The firm obtained a 50% stake in the business after Missguided sought emerging funding.

Now, the brand has officially collapsed into administration after what The Guardian has labelled as “failing to secure a rescue bid”.

The publication has also reported that 80 employees have already been made redundant, with another 140 jobs at risk.

Reports claim that fellow fast fashion label Boohoo was in talks to purchase the brand during a pre pack administration deal, however the agreement couldn’t be finalised. Asos and JD Sports were also contenders to buy out the company.

As of today, many of Missguided’s suppliers are seeking legal action for financial reparations owed. The Guardian have reported that over a dozen suppliers are “collectively owed millions of pounds for orders”. One factory owner told the publication that they have not been paid since April, calling the situation “completely unethical”.

Passi also stepped down from his role as CEO in April. As per WWD, he still remains on the businesses holding board.

Why Did Missguided Collapse Into Administration?

In a statement provided by Maher, Missguided’s collapse can be attributed to several reasons including supply chain issues and the changing retail landscape.

The full statement read:

“As we continue to see, the retail trading environment in the UK remains extremely challenging. The joint administrators will now seek to conclude a sale of the business and assets, for which there continues to be a high interest from a number of strategic buyers.” According to Darcey Jupp, Apparel Analyst at GlobalData, the brands demise can be linked to “its own lack of competitiveness rather than sudden fall in demand for fast fashion”.

“The true reason for its demise was its lack of competitiveness with the likes of Shein and boohoo.

“While many UK pureplays have struggled to continue their pandemic momentum in 2021 as in person shopping returned, Missguided has slipped further than most, with its lack of high-profile celebrity collaborations and uncompetitive pricing contributing to the brand losing the lucrative attention of young shoppers in the UK fast fashion market,” claims Jupp.

Is Missguided’s Collapse The End Of Fast Fashion?

As many analysts have suggested, Missguided’s collapse isn’t signifying the end of fashion, rather that the market is becoming capitalised by two major players: Shien and Boohoo.

According to a 2020 study by VOGUE Business, over 50% of 105 Gen-Z’s surveyed buy “most of their clothes” from Boohoo and other fast fashion e-tailers like Asos, PrettyLittleThing and Missguided”.

Given the appetite for accessible and affordable garments (albeit unsustainable and environmentally exploitative), it’s naive to assume that Missguided’s failure is signifying a shifting tide in the fashion industry.

However there is a lesson to learn from Missguided.

In a world of Shien hauls taking over TikTok’s FYP and second-hand stores rife with Missguided purchases, is advocacy around the dangers of fast fashion enough to cancel the industry?

Or will rapid fashion continue to prevail as a leading sector? And where does the onus lie in ensuring these fast fashion companies are regulated and truthful in their sustainability claims?

Despite Missguided’s collapse, consumers are still purchasing from its website, paying for next day delivery on items that may or may not ever arrive. Perhaps the alarming answer is that fast fashion, just like the garments the industry produces, will never be entirely gone.