Troubled U.K.-based online fast fashion retailer Missguided is understood to be on the brink of collapse after being issued with a winding-up petition by one of its apparel suppliers.
The company is reportedly close to calling in administrators from insolvency specialist Teneo as early as Monday after law enforcement officers were reportedly called to the retailer’s Manchester, U.K. headquarters when suppliers turned up earlier this week demanding overdue payments be made, claiming they are owed millions of dollars.
Manchester-based clothing supplier JKS Fashions issued a winding-up petition against Missguided May 10 and creditors have applied for compulsory liquidation, with a Manchester court due to rule on the case this July.
U.K. media outlets have suggested that three suppliers to Missguided have warned that they are at risk of going bankrupt because of still outstanding payments and apparently some U.K. and international suppliers have not been paid for months.
The news comes after months of speculation about the future of Missguided, once a darling of female Gen Z customers but more recently a victim of skyrocketing production and transportation costs, allied with the cost of living squeeze on shoppers. On top of that – along with other fast fashion retailers – it has been criticized on sustainability grounds for gimmicky sales offering products for little more than a dollar.
Missguided Saved From Collapse
In the Fall, the online retailer was saved from collapse when the retail investor Alteri, backed by investment firm Apollo, stepped in to take a 50% stake in the business and agreed to cover its mounting debts.
As part of a reshaping of the business, Alteri announced a round of redundancies in December as it implemented a turnaround plan to rebase the company and last month Missguided confirmed that it was looking for a new buyer, as its colourful founder, Nitin Passi, stepped down as chief executive – although he remained on the board.
Among potential suitors, U.K-based sports fashion retailer JD Sports and the Chinese-backed fashion giant Shein have previously been linked with bids for the business.
Missguided brought in Teneo to assess the strategic options available to it last month and it is now understood that the corporate advisory firm would oversee any insolvency proceedings.
The company said in a statement regarding the latest reports: “Missguided is aware of the action being taken by certain creditors of the company in recent days, and is working urgently to address this. A process to identify a buyer with the required resources and platform for the business commenced in April and we expect to provide an update on progress of that process in the near future.”
Founded in 2009 by Nitin Passi, Missguided was previously one of the shining stars among a new wave of online fast fashion brands that resonated with Gen Z consumers and soared at a time when many traditional apparel retailers were struggling and failing.
The company enjoyed stellar growth in its domestic market and expanded into the U.S., Australia, France and Germany, serving as many as 180 markets, while opening a number of irreverent flagship stores as it stepped out of being an online-only player. But the company was badly hit by recent cost increases and delivery disruption, while demand reduced as people couldn’t go out during the pandemic.