Mosaic Brands Enters Voluntary Administration, Putting 3,000 Jobs At Risk

Mosaic Brands, renowned for its popular Australian fashion labels including Rivers, Katies, and Noni B, has announced voluntary administration, following a failed restructuring effort, putting nearly 3,000 jobs in jeopardy.

According to the company's statement to the Australian Securities Exchange (ASX) on Monday, a "small number" of stakeholders did not agree to support the restructuring plan or negotiate a deal, due to which, a satisfactory solution could not be found, ABC reported.

"This process has involved discussions with a wide range of stakeholders, both locally and internationally, including Mosaic's senior secured lender, suppliers, service providers, landlords and the ACCC [Australian Competition and Consumer Commission]," the statement said. "The Group's leadership received the support of a significant majority of its commercial partners and was confident that the restructure would be in the best interests of all stakeholders. However, a small number of parties declined to support the restructuring proposal or negotiate a commercial outcome, and a commercially acceptable resolution could not be reached with the ACCC."

With over 700 retail stores nationwide, the company stated that sales will continue with a focus on the upcoming Christmas season.

In September, the company discontinued five of its brands, saying the move was aimed at stabilizing its finances.

Mosaic stated that closing Rockmans, Autograph, Crossroads, W.Lane, and BeMe would enable it to concentrate on its brands -- Millers, Noni B, Rivers, and Katies, as well as a standalone online marketplace, The Guardian reported.

Mosaic's management called the administration a "necessary reset" aimed at ensuring future success.

"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," CEO Erica Berchtold said.

Earlier this year, Mosaic faced challenges when it transitioned to a new fully integrated supply chain and distribution system in collaboration with a global partner. The migration led to an inventory shortage during the critical Mother's Day sales period from mid-April to mid-May.

In March, Mosaic Brands faced legal action from the consumer watchdog ACCC, saying that the retailer breached Australian consumer law by failing to deliver thousands of products to customers within the advertised period. The company faced penalties earlier as well, when it paid AU$896,400 after the ACCC issued two separate infringement notices in May 2021 and September 2022.

The company's share price has been declining since January 2020, when it was trading at AU$2.30. By February this year, its shares had dropped to 20 cents.

In September, ASX suspended the company from trading after a delay in submitting the 2023/24 financial report, which was due in August.

Before the suspension, the company's shares were trading at 3.6 cents, resulting in a total market capitalization of AU$6.4 million.