Missguided has collapsed into administration, leaving a trail of chaos in its wake.
The British fast-fashion e-tailer called in administrators from Teneo Financial Advisory to sell off its business and assets Monday after receiving a winding-up petition from disgruntled suppliers owed millions of pounds in unpaid orders. Of the roughly 280 staffers Missguided employed, 84 were immediately made redundant through a pre-recorded message, according to one whistleblower on Instagram. More are likely at risk, a source close to the matter told Sourcing Journal.
The clothing purveyor is still continuing to take orders at its U.K. website but Missguided U.S. now points to an error page. GXO Logistics, the clothing purveyor’s warehousing and distribution platform, is no longer fulfilling orders, according to people familiar with the situation. Missguided’s Twitter page is littered with messages from customers inquiring about the status of orders that haven’t turned up. Its Instagram page, which was still posting as of Sunday, has shut down all comments. (Efforts to reach GXO Logistics and Missguided proved unsuccessful.)
Founded in 2009 by Nitin Passi, Missguided rode the wave of an e-commerce boom that promised low-priced, trendy outfits with quick-turnaround times. It crested new heights of popularity when it dressed the contestants of the reality-TV show “Love Island.” Featured items, including a controversial 1-pound, or roughly $1, bikini, routinely experienced sales spikes of between 300 percent to 500 percent. When the pandemic hit, profits rose but so did air and freight costs. The rise of even-cheaper rivals like Boohoo and Shein hasn’t helped. Another blow: Facing criticism for promoting disposable fashion, “Love Island” dropped Missguided earlier this month in favor of secondhand looks from eBay.
Fissures in the Missguided empire appeared last year. In December, Alteri Investors stepped in with a significant investment in exchange for a 50 percent equity stake in the business. (Alteri did not respond to an emailed query.) It was around that time, several suppliers told Sourcing Journal, that Missguided imposed unilateral discounts of 30 percent on orders. In January, Labour Behind the Label, a Bristol-based workers-rights group, caught wind that some suppliers weren’t being paid. This “blip” in Missguided’s cash flow, which was temporarily resolved, augured an even more catastrophic problem, said Dominique Muller, the nonprofit’s policy director. Passi exited the company in late April. On May 6, suppliers started receiving the same phone call: The e-tailer would be freezing payments altogether.
“No one has got anything in writing that they’re not being paid,” Muller told Sourcing Journal. “Suppliers have been emailing and calling but they have been ignored. And at the same time, up until last week, the buying teams have been issuing new purchase orders.”
Suppliers have, for good reason, been in an uproar. Last week, a manufacturer flew in from China to protest outside Missguided’s headquarters in Manchester. An eyewitness said the man was blocking the parking lot, and the police were called in. Following the incident, workers at the building were told to work from home for “safety reasons,” a source said.
An Instagram post captured the sign the supplier had been holding up: “I need your help. I came all the way from China because my family, my employees and myself are in danger,” it said. “Factories send me death threats and smashed up my office. Because Missguided owes me money, I am unable to repay my factories. I need to speak to Missguided. I need my money now.”
Factories in China make up the bulk of Missguided’s supplier base, followed by Morocco and Pakistan, according to an insider. Production in the neighboring Leicester, which accounts for 10 percent to 15 percent of the company’s output, has been critical to its rapid speed to market. Muller said that most of Missguided’s contractors were smaller ones that dedicated roughly 70 percent to 80 percent of their operations to the brand, making them more vulnerable. Bigger ones might have had the wherewithal to say no to Missguided’s irregular payments, she said.
One Leicester supplier, who asked to remain anonymous for fear of reprisal, told Sourcing Journal that he’s had to sell his wife and mother’s gold jewelry to afford to pay his 80 workers. Missguided, which makes up more than half of the factory’s production, owes him more than half a million pounds for shipments stretching back to January. He’s holding onto several hundred pounds’ worth of finished clothing that he won’t be delivering until he hears from the company. He’s not holding his breath: After he received word that Missguided wouldn’t be honoring payments, it’s been radio silence.
“We’ve sold jewelry and taken out loans against our house,” the supplier said. “If they don’t pay us, we’ll definitely go down under. Maybe we’ll lose our property as well. We won’t be able to ride it out. I think the new owners have just been there to get their money out and they don’t give a damn about the suppliers.”
Finding new suppliers has been a challenge with Britain’s ongoing cost-of-living crisis. With soaring inflation, people just aren’t buying clothes right now. And depending on how Missguided’s assets will be allocated, suppliers could be left with nothing but their own bills to pay. Rumor has it that Boohoo and Shein could snap up what’s left of Missguided, though they both declined to comment. Boohoo is no stranger to buying troubled companies: It shelled out for the names and clothing stocks of Debenham’s and Arcadia Group’s Burton, Dorothy Perkins and Wallis brands last year.
Another Leceister supplier, who has produced exclusively for Missguided for the past four years, has had to shut up shop because he can’t afford to keep things going. When he accepted the 30 percent discount in December, it was with the assurance that this would help keep both businesses running. The call about suspended orders was a gut punch. With half a million pounds’ worth of stock in the machines and another 250,000 pounds of clothing being loaded onto trucks en route to delivery, the factory owner had to tell his 92 employees that he was shuttering until further notice. Altogether, Missguided owes him 2.2 million pounds, he said.
“They told us that the company is fine, there’s no issue, we’ll get paid every week,” he said Missguided told him before it stopped answering his calls. “They never mentioned that there was a financial issue in the company. Because once the investment company was bought on board, we were told that the company is doing very well. Now we haven’t paid payroll, we haven’t paid fabric mills, we haven’t paid trimming suppliers, we haven’t paid transporters, we haven’t paid anybody and we haven’t paid our rent as well.”
The factory owner has been in meetings with potential clients every day, but it could be a few months before he sees new business.
“We are trying very hard; we are really hoping that we can get new doors open,” he said. “Then we’re praying that Missguided survives because if they survive, then at least we get paid. The bottom line is we want to get paid. And we want to pay everybody.”
Another supplier, also from Leicester, wishes Missguided would just say something—anything. Her facility, which is in the hole for half a million pounds, has been working with the e-tailer “since the beginning.” With 70 percent of its output dedicated to Missguided, the livelihoods of 100 workers now hang in the balance. As it is, she’s had to dig into her savings to pay the creditors knocking on her door.
“I’m going to have to lay off staff because I’m not getting work either; I’m obviously not taking any more orders from Missguided,” she told Sourcing Journal. “It [would be something] if someone at least had the decency, as a human, to pick up the phone and say, ‘How are you guys doing?’ I think that would be nice. But we’ve heard nothing from them, so that’s a bit telling about how they are as people, you know?”
“I think it’s unfair because we’re at the bottom of the food chain,” the supplier added. “So I think they knew that this was happening and we weren’t made aware. And they continued to take orders on and they continued to place orders up until recently. I don’t think that’s fair.”
Previously she would ship out at least 10,000 units of clothing to Missguided every week.
Labour Behind the Label doesn’t usually advocate on behalf of suppliers because its remit is workers. Muller gets calls from suppliers every day now asking if she’s heard from Missguided. The situation, she said, is illustrative of the fashion industry’s glaring power imbalance. In the absence of due diligence or joint liability legislation, U.K. law “remains silent” on the financial and legal responsibilities of companies to their supply chain workers. Missguided’s membership in multi-stakeholder initiatives like the Ethical Trade Initiative and Fast Forward hasn’t protected workers, either.
“It’s a real human story,” she said. “It shows how big businesses need regulation; everything is skewed towards them. They’re going to get their money back. Suppliers won’t.”
On May 25, Missguided posted a meme on Twitter. Under the word “January,” Ross Geller from “Friends” is pictured looking ready for action alongside the caption, “You know what? I’m gonna be happy this year.” Under “May,” a shot of him in obvious pain simply reads “[SCREAMS].”
“Wow, mood x,” Missguided wrote.