As the face of online shopping for young women around the world, Missguided has faced its share of problems, despite its ever-present popularity in the fast fashion industry. Now the company is looking at potential buyers, questioning the future of the business.

Since its launch in March 2009, Missguided has witnessed immediate growth in the UK, subsequently expanding to France, Germany, the US and Australia. Nitin Passy, ​​chief executive (CEO), who founded the women’s clothing brand with a £ 50,000 loan from his father more than a decade ago, saw the Manchester-based company generate a significant turnover of over £ 200 million a year.

Passy began working in fashion after graduating with a degree in business management, starting his career working in wholesale in New York and London, before starting his own business, so Missguided was born. Passy saw the demand for young women’s fashion and was touched by the change in shopping habits, which has seen a sharp increase in online sales.

When Missguided first launched, most of the original ranges were purchased ready-made from wholesale suppliers. A few years later, Passy began building his own product team for the brand, and today this team, which now designs most of the styles the company sells internally. Initially, Passy was the only Missguided employee when the business first started, and he bought all the products, selected and packed the packages, created all the banners, wrote all the product descriptions, and even took care of the customers.

The company has been developing globally in recent years, now supplying to over 180 countries and is locally active in the United States, Australia, France, Spain, Ireland, Germany and Poland. However, after eight years of success, Missguided lost a significant £ 26 million in the 2017/2018 financial year. Despite its popularity among women aged 16 to 35, what exactly went wrong for the online giant?

Inevitably, Missguided has received criticism throughout its history. In particular, the branch of the online retailer in the United States was tried by Kim Kardashian, an American media personality and businesswoman, on July 4, 2019 for “collecting” designer items worn by the socialist. Kardashian cited a case where just hours after posting a photo of herself wearing a gold dress designed by her husband on Instagram, Missguided uploaded a photo of a model in a similar dress with the caption: “The devil is working hard, but Missguided is working harder . ” Kardashian claims that Missguided USA not only “reproduces the appearance of celebrities”, but “systematically uses the names and images” of stars to promote its website.

After going to court, Missguided was ordered to pay $ 2.7 million (£ 2.11 million) in damages, and the company was banned from using the reality star’s trademarks in connection with the sale, marketing or distribution of its products.

The threshold of collapse: securing investment

In the year to March 2021, Missguided achieved sales of £ 287 million, with the two largest markets being the United Kingdom and the United States. However, the Covid-19 pandemic inevitably created a ripple effect across the retail industry, with many businesses affected by supply chain disruptions and Missguided was no exception. The company is affected by increased costs and “difficult trade” as the return of retailers from major streets such as Primark, H&M and New Look, following the easing of blocking restrictions, has led to “increased competition”.

With the effect of the Covid-19 snowball making consumers ‘pockets tight at discretionary costs, Missguided dropped a bomb late last year that the company is facing bankruptcy and is therefore selling half of Alteri Investors’ backed business. by US private equity giant Apollo to save itself. With the support of Alteri Investors, Missguided said its management will be able to “drive improvement” in its performance and will work with management to transform the group’s profitability.

Missguided added that the investment, which includes both debt and 50% of the group’s equity acquisition, will provide businesses with the liquidity and support they need to meet the short-term challenges of the supply chain and a return platform. of business to sustainable profitability.

At the time, Gavin George, founder and CEO of Alteri Investors, said: “As a digital retailer of pure gaming, Missguided is exposed to key markets that are enjoying strong double-digit growth, and the brand is in a very good position to seize the opportunity. which this positive market dynamics is present. “

Since then, Missguided has also faced challenges in dealing with the cost of living crisis, which also has a negative impact on trade, especially on non-essential items. The results of the Opinion and Lifestyle Survey (OPN), covering the period from 16 to 27 February, found that due to the increase in the cost of living, 51% of adults spend less on insignificant things. At that time, the Office for National Statistics (ONS) revealed that the annual inflation rate had reached a new 30-year record with 7% growth in the 12 months to March 2022, which also accrues additional costs for business.

Sustainability issues

Another hurdle that may hinder the Missguided trade is the rise of sustainable fashion trends. According to Pew Research, Generation Z is “extremely” concerned about climate change, with 76% saying it is one of their biggest societal problems, while 37% say it is the number one problem. Similarly, research by First Sight found that the majority of Generation Z consumers are often reluctant to go fast and want to buy second-hand, as evidenced by the success of brands such as DepotThredUp or RealReal.

Missguided therefore received further criticism for neglecting the environment. According to Good on You, the movement for the evaluation of sustainable and ethical fashion brands, Missguided’s environmental assessment is “very bad.” The brand fails to publish “sufficiently relevant information on its environmental policies to give a higher rating”. In addition, the delivery platform claims that as a fast fashion brand that launches up to 1,000 new products each week, Missguided “clearly encourages overconsumption and creates a lot of waste as a result.”

Overall, Missguided was found to be lagging behind other UK retailers in terms of sustainable practices and, according to The Independent, is one of the least sustainable fashion brands in the UK. in 2018, the Environment Audit Committee (EAC) wrote to 16 UK retailers asking them to provide evidence detailing what measures they are taking to reduce the environmental impact of the clothes they sell. However, Missguided was among those who did not join the targets set by the Sustainable Clothing Action Plan (SCAP) to reduce their footprint on carbon, water and waste.

The EAC report found that the brand has not signed an agreement on labor rights for action, cooperation, transformation, which works to earn a living for all workers in clothing. To date, four years after the report was published, Missguided has not yet taken steps to communicate or provide “sufficient” information on its policies, although it announced this month that in the medium term its focus will shift to initiatives aimed at towards achieving sustainable growth, but information on how this will be achieved remains to be seen.

In general, consumers are more socially aware than ever and are looking to buy from organic brands. However, as Missguided fails to be transparent about its sustainability, this could potentially affect sales. First Insight found that Gen Z was more likely to make purchasing decisions based on its values, with three of the four Gen Z users prioritizing sustainability over brand name when making a purchase. The majority of Generation Z buyers prefer sustainable brands and are even willing to spend an extra 10% more on organic products.

Where are they now?

As the women’s clothing company tries to get back on its feet, Missguided announced last week (April 20th) that Passy will step down as CEO of the company, although he will remain on the board of Missguided’s holding company. to represent his permanent share of the family in the business. While there is “great pride in what we’ve created,” Passy says this is the right time to step away from Missguided’s day-to-day leadership as the business explores partnership options after being hit by rising costs and difficult trading.

This follows Missguided’s recent review of the business structure, which concluded that “it needs to align its costs to better match its current performance”, amid supply chain disruptions, cost inflation and reduced customer demand . As a result, Missguided launched a 45-day consultation process and put 140 jobs at risk in February as part of its proposed restructuring. The consultation ended last week and reportedly dropped to 63 after redistribution and a voluntary redundancy program.

As a result, the business announced last week that it had hired Teneo, a consulting firm, to explore “strategic options” for Missguided’s future, in a bid to find “strategic partners” as well as potential buyers. The company is trying to “bring the infrastructure Missguided needs to ensure the next step in its progress” after “significant progress in dealing with inventory problems, streamlining warehousing operations and reducing central office costs”. Missguided said it could now speed up plans to find a strategic partner to complete the next phase of the turnaround and “maximize its potential”.

Missguided President Ian Gray said at the time: “Misguided has made significant operational progress since receiving a new investment at the end of 2021, which has put us on a solid footing for a very short period of time and I want to thank everyone for their labor work. This work means that we are now able to accelerate plans to explore strategic business options.

Meanwhile, last Saturday (April 23, 2022), speculation began circulating the industry for possible takeovers by other retail giants. This is Money, announced that JD Sports has been identified as a potential candidate for the acquisition of Missguided; while discussions are said to be at a “very early stage”, sportswear retailer chiefs are reportedly discussing a potential move. Similarly, rivals Boohoo and Mike Ashley Frasers are also said to be possible contenders.

Overall, despite controversy over Missguided’s authenticity and resilience, the retailer has managed to withstand any obstacle thrown in its way. It remains to be seen what the future of the women’s clothing brand will look like and whether Missguided will be able to come out on the other side and stay afloat.

Missguided: what went wrong?

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