Misguided Into Administration - Who's Next?
- Thread starter MOIC
- Start date
Luckily for you, I am one of them, and I actually sell a few Missguided products here and there.
I just think Fast Fashion had it's glory days and there will be more deaths in the future as people start turning to more sustainable/long-term products. There are far too many online websites selling the exact same stuff with questionable quality with the only difference being a different logo on the tag. That and the fact that these companies usually import from Asia and the issues with supply chains and rising costs are not helping them one bit. Just another Zombie company to fail with more to come.
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Studio.co.uk went a few months ago - they were worth a few bob. I can see loads of businesses getting caught out with overstocks/cashflow issues.
Personally I've found it to be the most challenging time in our 20 years as a business.
2019 Sales 10% below average
2020 Sales doubled due to lockdown
2021 Sales below '20 but still 50% above 2019. Would have been higher but had stock-outs.
2022 Sales 25% below 2019. Finally got lots of stock but no customers!!!
Think demand saturated in 2020/21.
Have never seen such a big change in consumer behaviour as this one
Personally I've found it to be the most challenging time in our 20 years as a business.
2019 Sales 10% below average
2020 Sales doubled due to lockdown
2021 Sales below '20 but still 50% above 2019. Would have been higher but had stock-outs.
2022 Sales 25% below 2019. Finally got lots of stock but no customers!!!
Think demand saturated in 2020/21.
Have never seen such a big change in consumer behaviour as this one
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- Original Poster
- #15
I think companies such as Misguided, Forever 21, Boohoo etc are in the 'Quick Fashion" business, which originated in Italy over 30 years ago (Pronto Moda), then taken forward by the likes of Zara & Mango. The quality was sufficient to last a season or two, as new designs, colours & materials changed each season.
I agree, but over the past 20 years or so, the big companies saw this (especially Inditex who own Zara) who manufactured in Spain and other companies who looked at Turkey, Rumania, Morocco for cheap European manufacturers with quick lead times as well as quicker shipping than Asia. Leicester factories were also used for basic clothing items for quick deliveries.
Some of the big companies used air freight from China to get into the selling season, so vastly increasing their costs over sea freight, so buying from Europe was a good option.
I think this is the main reason that the quick fashion companies are in trouble.
2020 & 2021 were difficult years to gauge what quantities to order, add to that crazy shipping costs and the returns which are associated with people buying 10 items and returning 9, and there's enough there to cancel most of the profits that were made.
Agree with both above posts that there will be more of these companies going to the wall as overstocked items become obsolete once the season is over and in most cases cannot be given away. Rising production costs, shipping costs, importing from Europe (Post Brexit) and smaller margins to compete with all the competition that's out there, are added factors.
Tough times ahead for many in the 'Quick Fashion' trade. . . . . . as well as many other businesses.
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Missguided had been bought by investors previously due to almost going under a few years ago I think?
Remember that Shein have gobbled up a lot of the lower end of the market in fast fashion too, cheap, disposable, long delivery times but at those prices, nobody cares. They're worth a few billion, global market, direct from China, replicas of popular branded fashion etc.
The gap between cheap and good quality is getting bigger. Quality materials costs are shooting up, pushing prices up. Cheap goods are still relatively budget friendly.
Remember that Shein have gobbled up a lot of the lower end of the market in fast fashion too, cheap, disposable, long delivery times but at those prices, nobody cares. They're worth a few billion, global market, direct from China, replicas of popular branded fashion etc.
The gap between cheap and good quality is getting bigger. Quality materials costs are shooting up, pushing prices up. Cheap goods are still relatively budget friendly.
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Well I’m an older member (lol) and know Missguided agree with a lot of the above the market both online and high street completely saturated with cheap fashion. When you look at most of the business models it’s run quick expand fast make yourself attractive to the investment funds sell out and leave the business to be run by bean counters who then seem to always have the knack of runNing them into the ground. They seem to be great at siphoning money out of companies and leaving them empty shells. A lot of retailers have fallen by the wayside due to this and more to follow, that’s for sure.
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- Original Poster
- #22
The Italians were the masters of Pronto Moda. They manufactured most of the garments in Prato (not far from Florence) as well as elsewhere in Italy. The advantage they had was that the materials were local, designers were great (Italian!) and labour was cheap (they often used Chinese immigrants who were located in San Donnino.
Others who followed this model, had to rely on China to compete. Huge quantities required to get into their required price points and long delivery/shipping times. That was the flaw.
Now, there is huge competition in this marketplace and the mark up required for expanding this type of business was x 8 of cost price. Now they rarely get more than x 3. Not enough in this day and age to make a profit which you can invest in.
The next two years will see a lot of closures, not only in the fashion clothing business, but many categories who cannot make sufficient profit required to survive as well as invest in new stock, marketing etc.
As they used to say (probably still do), profit is not a dirty word!
Others who followed this model, had to rely on China to compete. Huge quantities required to get into their required price points and long delivery/shipping times. That was the flaw.
Now, there is huge competition in this marketplace and the mark up required for expanding this type of business was x 8 of cost price. Now they rarely get more than x 3. Not enough in this day and age to make a profit which you can invest in.
The next two years will see a lot of closures, not only in the fashion clothing business, but many categories who cannot make sufficient profit required to survive as well as invest in new stock, marketing etc.
As they used to say (probably still do), profit is not a dirty word!
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I think cheap Fast Fashion will always have a place, but I don't think it will be as promising for them to have standalone websites as their costs are far too high. 50% return rates rates with sky rocketing costs as well as the fact that a lot of these retailers try to have 12 seasons a year now meaning they need to factor in that the majority of what they buy either won't sell in time for the next season, or will be returned. All this makes it very hard to be left with any profit. This is one of the reasons why Primark stays away from online selling and I think B&M will be the go to place for cheap fast fashion just like it is for a lot of other Discounters (although in lower amounts than we have today as it is still a saturated market).
One place I do see brands such as Missguided going will be to Multi-Brand online retailers, the likes such as Asos just like how they bought Topshop. It makes more economic sense for me to buy say a high mark-up pair of Nike shoes, an expensive Tommy Hilfiger Jacket and then throw in a pair of Missguided jeans in the same basket as opposed to buying each from a separate retailer.
One place I do see brands such as Missguided going will be to Multi-Brand online retailers, the likes such as Asos just like how they bought Topshop. It makes more economic sense for me to buy say a high mark-up pair of Nike shoes, an expensive Tommy Hilfiger Jacket and then throw in a pair of Missguided jeans in the same basket as opposed to buying each from a separate retailer.
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From the BBC
www.bbc.co.uk
Missguided fashion retailer on verge of collapse
The fast fashion brand could call in administrators as early as Monday, the BBC has been told.
www.bbc.co.uk
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Talked up massive inflation on fuel bills, food so people tightening purse strings. Returns at very high levels. is it any wonder that cheap clothing is getting hit and customer requirements changing
Many of these companies are tied into massive payments to investment companies who milk them dry
Many of these companies are tied into massive payments to investment companies who milk them dry
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- Original Poster
- #28
Agree.
They see a bigger market share. I think Shein are best placed of the current bunch to grow this market, due to the market share they command in the Far East alone. Inditex are too Euro centric and BooHoo sell crap. Asos have benefited from selling other brands. Forever 21 will always teeter on the brink.
A company with an eco-friendly ethos and the use of natural sustainable fabrics is likely to gain traction in this market. Currently, none of the above fall into that category.
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- Original Poster
- #30
I was never convinced Boohoo buying Debenhams online was a good fit, as they had completely different customer profiles.
Shein work with hundreds of small manufacturers, so can get sample runs of 100-200 to test the market and get feedback within a few days after launching a new product and marketing on social media. They are streets ahead of their rivals in social media marketing, especially tiktok.
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Are Shein able to take advantage of the ultra-low international postage rate between China and UK?
I guess they are due to the relatively compact size of goods that they sell.
What is the limit on this rate (weight) does anybody on this board know?
And just how much does it the postage cost from China?
Surely this subsidised method of postage will have to end soon won't it?
Fair enough when China was a developing nation but a bit silly in the present day?
Would I be correct in assuming that the UK is happy for this relationship to continue unabated as it contributes to keeping inflation down. Also the government is probably scared of any repercussions from China?
I guess they are due to the relatively compact size of goods that they sell.
What is the limit on this rate (weight) does anybody on this board know?
And just how much does it the postage cost from China?
Surely this subsidised method of postage will have to end soon won't it?
Fair enough when China was a developing nation but a bit silly in the present day?
Would I be correct in assuming that the UK is happy for this relationship to continue unabated as it contributes to keeping inflation down. Also the government is probably scared of any repercussions from China?
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Trump tried to get it changed but looks like kicked into touchdown and not even on the books for the UK as I see it
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Yep,
My youngest looking for a yr11 (gcse) Prom dress has ordered 5 from Asos to see which fits and looks best (she hasn't filled out yet but is 5'10"), she will send at least 4 back and be left with 1 purchase max which is in the £30-40 range - I can't see how that works as a business model once you deduct shipping
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Seems to be sweeping everything up:
www.bbc.co.uk
Missguided: Sports Direct owner Frasers Group buys fashion retailer after collapse
The fast fashion brand has suffered from supply chain issues, rising freight costs and increased competition.
www.bbc.co.uk
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