Nitin Passi’s Missguided seeks emergency funds to survive
FILE PHOTO: Nitin Passi arrives at the Sofia Richie x Missguided launch party at Bootsy Bellows on September 18, 2019 in West Hollywood, California. (Photo by Morgan Lieberman/Getty Images)
BRITISH fast-fashion retailer Missguided is trying to raise emergency funds as supply chain disruption has hit the firm hard, reported The Times.
Nitin Passi-owned Missguided is working with restructuring experts at AlixPartners to find an investor to survive the crisis, the report added.
Reports said that online retailers have suffered from surging shipping costs and labour shortages that have prevented them from sourcing stock in tight timeframes.
Missguided was also impacted by the emergence of Chinese operator Shein, which swiftly turned into a global force.
Six months ago, Nitin Passi revealed that he was seeking an investor to fund growth, adding that it had its “magic back” after a period of poor performance.
According to reports, Missguided was in talks with JD Sports, but the high street giant is understood to have pulled out over concerns about supply chain disruption.
Passi, 38, founded Missguided 12 years ago with a £50,000 loan from his father. In 2016, an ill-judged expansion onto the high street derailed the rapid growth of the company. Passi shut down its London flagship store two years after opening it.
He gained a reputation for flashy PR stunts, including painting his Lamborghini in Missguided’s signature pink. He also allowed in a Channel 4 film crew in an attempt to clean up the company’s image after an investigation alleged that one of its suppliers was paying staff £3.25 an hour, an allegation denied by the supplier.
According to The Times report, Missguided’s sales were about £290 million in the year to March. The company reported an underlying profit of £2.1m in the year to March 2020.
Fast-fashion companies import vast quantities of clothes and sell them at low margins. But the crisis in global supply chains had affected them badly. Shipping costs rose sixfold this year amid surging consumer demand as global economies reopened, The Times report added.
To overcome the supply chain crisis, companies such as Boohoo have used chartered planes to move stock. The additional costs have left high street retailers dealing with stock shortages and a fresh squeeze on their cash flows.
In 2021, £4 billion has been wiped off the total value of Boohoo and Asos amid warnings that disruption will persist well into 2022 as well.
Another high street stalwart Matalan has drafted in debt restructuring experts from Deloitte ahead of crucial refinancing talks in 2022. The discounter is sitting on a debt pile of almost £500 million, with £348.7 million maturing in 2023, The Times report said.
The company, which reported second-quarter operating profit of £35m on sales of £264.7m, had £173m of cash at the end of August.