Australian apparel business Mosaic Brands has appointed voluntary administrators as recent attempts to rightsize the business fell through.
FTI Consulting’s Vaughan Strawbridge, Kate Warwick, David McGrath, Kathryn Evans are the appointed voluntary administrators.
KPMG’s David Hardy, Gayle Dickerson, Ryan Eagle and Amanda Coneyworth have been appointed as receivers and managers.
The Mosaic Group owns and operates Australian retail brands such as Rivers, Katies, Noni B, Millers, Autograph and W Lane with over 700 stores nationally.
According to a statement from KPMG, the appointment of the external administrators by the Mosaic 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 Mosaic Group and the management team, led by CEO 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.”
Berchtold said that Mosaic Brands continues to be an “exciting opportunity” to reshape a business with a clearly defined market proposition for its target customers, and employees.
“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 recent fall into administration follows a recent market update where Mosaic revealed it will wind down five of its subsidiary businesses Rockmans, Autograph, Crossroads, W.Lane and BeMe brands, including all stores and websites.
Rockmans, Autograph and W.Lane together have over 200 stores across Australia, according to Mosaic Brands’ 2023 annual report. Crossroads and BeMe are both pureplay brands.
“The Mosaic Brands group owns a portfolio of iconic fashion labels whose clothing and products are much loved by generations of Australians,” KPMG Australia’s turnaround and restructuring partner David Hardy said.
“We will be seeking to stabilise the operations of Mosaic 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.”
The receivers will be overseeing the trading operations of the group, whilst the administrators will be seeking offers to recapitalise or acquire the Mosaic Brands business.
In a statement to the market, Mosaic Brands noted that the executive team progressed plans to restructure, realign and simplify the group’s operations over the past few weeks.
“These initiatives have included rationalising the group’s brand and store portfolio and focusing on key growth brands, reducing costs and improving Mosaic’s working capital position.
“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.”
The ACCC recently issued proceedings in the Federal Court, alleging the group breached Australian Consumer Law relating to late or non-delivery of goods during the Covid-19 pandemic and its immediate aftermath.
“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, resulting in a more focused and financially stronger retailer, with the expectation that its securities would resume trading on the ASX,” the group continued.
“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. Accordingly, Mosaic’s Board made the difficult decision today to appoint administrators.”
The board then thanked the majority of long-standing partners who supported its effort to negotiate an informal restructure of the group.
“With the group continuing to trade, management intends to progress its brand rationalisation and wider restructuring plan and to focus on the key Christmas and holiday trading period.
“The board wishes to reiterate its belief to those who supported the restructure, to Mosaic’s customers and, most importantly, to Mosaic’s dedicated team across Australia, that the business has a long-term future.”