Major Aussie fashion retailer goes bust

Major Australian fashion retailer Mosaic Brands has entered voluntary administration, putting thousands of jobs at risk.

The ASX-listed retailer, which holds iconic brands such as Rivers, Katies, Millers and Noni B, announced its move into administration on Monday afternoon.

“Following recent attempts by the company to informally restructure its operations, the Board of Mosaic has determined that voluntary administration is now the most appropriate way to restructure the group,” the company said.

The company has appointed Vaughan Strawbridge, Kathryn Evans, Kate Warwick and David McGrath from FTI Consulting as administrators.

Mosaic’s senior secured lender has appointed KMPG as receivers and managers to work alongside the administrators in the restructure process.

The administration process means control of Mosaic will shift to FTI Consulting and KPMG, who will assess the company’s accounts and determine whether it can be restructured to continue trading or whether it is in the best interest of creditors and employees to enter liquidation.

The company has some 2700 employees and more than 700 stores nationwide but has moved to “rationalise” or downsize its operations in recent months.

On September 30, it exited the Rockmans, Autograph, Crossroads, W.Lane and BeMe brands and closed some 200 stores as it moved to focus on “five core growth brands”.

“The Group will now capitalise on and invest in its Millers, Noni B, Rivers and Katies brands, along with a stand-alone online Mosaic marketplace,” the company said in a statement.

On Monday, Mosaic said it would further progress its brand “rationalisation”.

“With the group continuing to trade, management intends to progress its brand rationalisation and wider restructuring plan and to focus on the key Christmas and holiday trading period,” the company said.

Shares in the company have plummeted in the past 12 months, tumbling from 10c to 3.6c to give the business a market capitalisation of just $6.4m.

But Mosaic chief executive Erica Berchtold said the company could reverse its flagging fortunes.

“Mosaic Brands continues to be an exciting opportunity to reshape a business with a clearly defined market proposition for its target customers, and employees, that we can be proud of,” she said on Monday.

“Our priority is to accelerate the rationalisation plans we have in place to focus on the core brands to service current and attract new customers across metropolitan and importantly regional Australia.”

In a statement, KPMG turnaround and restructuring partner David Hardy said his firm would seek to “stabilise” Mosaic’s operations.

“The Mosaic Brands group owns a portfolio of iconic fashion labels whose clothing and products are much loved by generations of Australians,” Mr Hardy said.

“We will be seeking to stabilise the operations of Mosaic to preserve the underlying value of the business while endeavouring to serve its customers, with support from its employees and suppliers to minimise business interruption.”

The consulting firm flagged “structural challenges and disruptions relating to suppliers and inventory management” for Mosaic’s struggles.

KPMG will overseeing the trading operations of Mosaic, while the Administrators will be seeking offers to recapitalise or acquire the business.

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