Garment manufacturers and consumers alike are up in arms over the new Missguided, which they say is the old Missguided with a thin wash of fresh paint.
The fast-fashion e-tailer, now operating under the auspices of Sports Direct and House of Fraser owner Frasers Group, reopened its doors last week with a 70 percent-off MG Warehouse Sale, trumpeting the fact that “everything must go.”
“We are excited for our future as we reshape our brand, product offering and customer experience to come back stronger than ever before,” Missguided wrote in a “customer statement” on its website. “We are acutely aware of the impact Missguided’s administration has had and we’d like to take this opportunity to thank you for your continued support.”
Customers who placed orders before June 16 and seek refunds for returns or unfulfilled orders, however, are essentially out of luck. Because those orders were placed with Missguided Limited, a.k.a, old Missguided, any money owed now ranks as an unsecured claim in the administrators.
“The administrators have advised that they are legally unable to refund unfulfilled orders or accept any refunds for any items you may wish to return,” Missguided wrote in an accompanying FAQ. Anyone who wants to submit a claim will have to register as an unsecured creditor at an insolvency website, it said. Teneo Financial Advisory, Missguided’s administrator, did not respond to a request for comment, nor did anyone from Missguided or Frasers Group.
Angry customers have flooded Missguided’s Twitter and Instagram pages demanding the money that they’re owed. “Stronger than before? You haven’t changed anything, you’re still selling the same garments on your website that you were before, you’re just not dispatching them to people who’ve paid. If you still have the previous stock then orders should be honored,” one of them wrote. “In today’s climate do you actually think it’s OK to take people’s money and keep it!!? Will not shop with you ever again,” another raged. “Missguided selling the stock that most people have paid for and returned and not been refunded for!!!!!” a third said.
The confusion over where the old Missguided ends and the new Missguided begins became more acute after Frasers Group reappointed Nitin Passi, who founded the Manchester-based company in 2009, as its CEO. Passi sold a 50 percent stake in Missguided to Alteri Investors, which declined to comment for this story, near the end of 2021. It was around that time that Missguided imposed unilateral discounts of 30 percent on orders, suppliers said. In April, Passi stepped down from his chief executive position, just as the clothing purveyor announced it was cutting dozens of jobs.
“I’m absolutely furious at the fact Nitin has gone back and that he thinks he can just start from a fresh and ignore the disaster he’s left in his wake,” a former Missguided employee, who requested anonymity for fear of backlash, told Sourcing Journal.
More outraged still are the suppliers who are likely owed tens of millions of pounds, though the exact amount is difficult to peg, since old Missguided’s sourcing base spanned countries such as China, Morocco, Pakistan and the United Kingdom. Many of those based in the English manufacturing hub of Leicester recognize the items being hawked off at the MG Warehouse Sale. They haven’t been paid for them and may very well never be.
“The website is running and they are selling stock we delivered but they have not paid for that stock,” one Leicester-based supplier, who asked to remain anonymous, told Sourcing Journal. The factory, which made clothing exclusively for Missguided, has shuttered and cannot pay its workers because there is simply no money. A search for new clients has so far proven unfruitful.
“We are completely destroyed and haven’t heard anything from anyone,” said another Leicester supplier, which also relied heavily on Missguided for orders. “It’s disgusting behavior from these corporates. Huge bills and still can’t get our head around things.”
The factory owner is convinced that the entire string of affairs, including Missguided’s collapse into bankruptcy, was “100 percent pre-planned” as a way to renege on its debts. Missguided, the manufacturer said, “bought massively” in the first four months of the year even after cracks in its business had appeared. It’s hard for the supplier to see this as anything but nefarious.
Dominque Muller, policy director at Labour Behind the Label, a Bristol-based workers’ rights group, is fighting to claw back cash for suppliers and their employees. She’s heard that Teneo will be operating the Missguided storefront for the next eight weeks to sell off the old company’s stock. After that, the new Missguided will operate as a standalone business. The biggest question on her mind now is what happens to the proceeds of this MTG Warehouse Sale? She also wants to know what multi-brand retailers like Asos and Zalando, which sell Missguided products, plan to do.
In a letter she delivered Friday, Muller urged Passi and Michael Murray, CEO of Frasers Group, to settle its debts with Missguided suppliers, “thus respecting the legal rights of workers who made Missguided clothes.”
“Missguided.co.uk is now back online and is selling stock which has not been paid for,” she wrote. “We have been in communication with a number of suppliers who have identified clothing which has in essence been made for free by workers and the profits of these garments are now going back into Missguided. This is not acceptable. Currently, Alteri investors (and its company ERS), R.Passi and Nitin Passi will benefit from the sale of Missguided as charge holders and Teneo—as administrators will also earn a fair salary for the administration process while suppliers and supply chain workers are left as unsecured investors. Once again, this is not acceptable.”
Labour Behind the Label has already filed complaints to the U.K.’s insolvency practice and investigations and enforcement services over potential fraud and wrongful trading. The organization also plans to follow up on individual director’s liability under the 1986 Insolvency Act, the 2006 Companies Act and the 2010 Bribery Act.
“Suppliers are just absolutely gobsmacked,” Muller told Sourcing Journal. “Did [Passi] engineer this all? Did he sell to Alteri knowing that the company was losing business, knowing that Alteri would run it down in order to resell? It’s conjecture but suppliers are saying that this was a deliberate move, to basically get rid of all the debts and start again. And if it wasn’t deliberate, because some suppliers were [previously] giving him the benefit of the doubt, most of them now are just like, ‘You know, I’ve got no faith in him whatsoever.’”
Missguided, which was recently ejected from the Ethical Trading Initiative for “unsatisfactory” ethical performance, will either have to find new suppliers or go back to their old ones. Muller said, however, that the manufacturers she’s spoken to say they will never do business with the company again.
Meanwhile, Labour Behind the Label hopes that other fashion brands will write to the British government to push for a revision of U.K. laws to put some guardrails in place so something like this doesn’t happen again. There also needs to be a reform of insolvency laws so “workers are not right at the bottom,” Muller said, adding that she’s spoken to workers who haven’t been paid for nearly two months. “The number of worker cases that we’re going to see will increase as we go on.”
“Many brands in the U.K. have already called on the government to do more and to introduce due-diligence legislation,” Muller said. “And it’s an example I think of where brands are desperate for a level playing field, which is what they call it, and the government is way behind the brands. And whether that is a political or ideological stance, or just because the government is utter rubbish, I don’t know. You can quote me on that.”