Fast-fashion giant Missguided edges closer to a rescue deal
Fashion retailer Missguided is on the cusp of a rescue deal, after a challenging pandemic period for the fast-fashion machine.
It is understood that the company has agreed the terms of a deal with Alteri, the investment management firm, which will give it a cash injection and a loan.
The firm, which itself is backed by the private equity giant Apollo Global Management, specialises in buying struggling retailers, and is expected to appoint directors to the retailer’s board and orchestrate the turnaround for the company, as understood by The Sunday Times.
Supply chain issues triggering high freight costs have meant Missguided’s margins have been significantly impacted over the past year, thereby putting them in financial difficulty.
Sources previously told the Telegraph earlier this year that founder and owner Nitin Passi was seeking £50m in emergency funding from outside investors.
In its most recently available accounts, for the 12 months to the end of March 2020, the company achieved a turnover of £201.9m and pre-tax losses of £8.2m.
It was also reported in September by Sharecast that JD Sports was considering acquiring the retailer.
It comes as companies like Shein, a Chinese retailer, have started to dominate the market, chipping away at Missguided’s market share and undercutting it.
Nitin Passi, 38, started the online store in a factory in Manchester in 2009. It began with the help of a £50,000 loan from Passi’s father, which Cheshire-born Passi was able to repay within six months.
However, Missguided is not the only clothing business to struggle in recent weeks.
As City A.M. recently reported, the fashion and homeware retailer Matalan has hired debt restructuring experts from Deloitte as it looks to refinance next year. It is also poised for a rescue deal after the supply chain crisis plunged it into financial difficulty.
Additionally, Boohoo shares crashed to a five-year low after the company warned of slowing sales.
More generally, fast fashion has been under the spotlight in recent years after various scandals have revealed exploitation of garment workers in the UK and overseas.
Research from Rogue Media found Gen-Z orientated brands are increasingly using tactics such as countdown timers, exclusive subscriber discounts and trending stickers, to entice users to make purchases.
Missguided was identified as one of the brands to frequently use so-called ‘dark patterns’, on its website.
The company is due to file its next set of accounts by the end of this month.