Owner of Katies, Noni B and Millers goes into administration
Mosaic Brands, the retailer that owns clothing brands such as Katies, Millers and Noni B, has been placed into administration, putting the jobs of almost 3000 employees at risk.
In the past few months, Mosaic Brands’ board and chief executive Erica Berchtold were trying to renegotiate deals with suppliers and landlords to keep the business afloat and had axed a handful of its brands including Rockmans, Autograph, Crossroads, W Lane and BeMe.
Mosaic Brands’ shares were suspended from trading on the sharemarket in early September after the group failed to file its full-year financial accounts.
Mosaic Brands owns Rivers, Katies and Noni B.
In a statement on Monday, Mosaic Brands said it had appointed FTI as voluntary administrators and KPMG as receivers and managers after it failed to secure support for its restructuring proposal from “a small number of parties”, which included its senior secured lender.
“The appointment of the external administrators by the board follows what has been a difficult period for the business which has faced a number of structural challenges and disruptions relating to suppliers and inventory management,” the company said.
“The Mosaic group and the management team, led by chief executive Erica Berchtold, see this as a necessary process to reset and a pathway to accelerate its plans to focus on its core brands (Katies, Millers, Noni B and Rivers), resolve legacy issues and right-size the store network to ensure the ongoing success of the business.”
Mosaic Brands had more than 700 stores nationally, and in the past few weeks it had begun shutting a number of stores.
Erica Berchtold is chief executive of Mosaic Brands, which was placed into voluntary administration on Monday. Credit: Louie Douvis
“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,” Berchtold said. The company will continue to trade.
KPMG partner David Hardy said the focus would be to stabilise Mosaic’s operations and “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”.
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Mosaic Brands has cycled in and out of profitability in recent years. It was caught on the back foot during pandemic lockdowns and was forced to rapidly improve its e-commerce offering. Cash-flow has been constrained by lower spending by consumers affected by cost-of-living pressures.
Under Berchtold, who was appointed chief executive in April, Mosaic’s management was trying to turn the business around by slashing costs. It was negotiating reduced rents with landlords and, in some instances, had offered global suppliers one-third of what they were owed in a payment plan stretching over a two-year period.
Suppliers from Bangladesh, India and China were owed tens of millions by Mosaic. As a collective, they were divided over the extraordinary losses they had been asked to absorb by Mosaic management and also the payment plan negotiations.
Mosaic said in a statement it had received support from many of its commercial partners for its restructuring plan. But it had been unable to convince its senior secured lender, as well as some commercial parties, and resolve an outstanding dispute with the Australian Competition and Consumer Commission.
The ACCC had brought a lawsuit against Mosaic for allegedly failing to meet advertised delivery timeframes for several hundred thousand products that meant some customers paid for items that never arrived.
Shareholders in Mosaic include some of the nation’s wealthiest individuals, such as billionaire Spotlight owners Zac and Morry Fraid, whose investment vehicles own just under 20 per cent of the retailer. Other investors in Mosaic are Tony Berg, a former chief executive of Macquarie, and the Alceon group, co-founded by Trevor Loewensohn, a former investment banker, and former Babcock & Brown chief executive Phil Green.
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