Online fashion chain Missguided plunges into administration putting 330 jobs at risk

Rivai H Tukimen

British fast-fashion website Missguided has fallen into administration putting 330 jobs at risk after failing to agree on a rescue deal.

The struggling firm, which once advertised a £1 bikini, received a winding-up petition by some of its suppliers, who are still due payments worth millions of pounds.

The online retailer had been in talks with Boohoo, JD Sports and Asos but none of them finalised a takeover.

It became wildly popular after advertising its range on celebrity dating show Love Island, and thrived during the pandemic before its sales were hit by the reopening of physical stores and the cost of living crisis. 

American social media personality Sofia Richie modelling her collection with Missguided in 2019

Missguided become known for using social media influencers to market its products

Missguided become known for using social media influencers to market its products 

The struggling firm, which once advertised a £1 bikini, received a winding-up petition by some of its suppliers, who are still due payments worth millions of pounds

The struggling firm, which once advertised a £1 bikini, received a winding-up petition by some of its suppliers, who are still due payments worth millions of pounds

Missguided appeared to still be accepting orders today but it wasn’t clear if its distribution partner GXO will take them on.

How fast-fashion firms have been hit by working practice concerns and environmental worries 

By Lizzie May for MailOnline  

Fast fashion brands have been in the spotlight for many controversies since the Covid-19 pandemic, and have also faced profit slumps.

Boohoo, a rival of Missguided, saw their shares plunge by £1.3billion in July 2020 after Priti Patel asked the National Crime Agency to investigate the fast fashion chain over claims they were using an alleged £3.50-an-hour sweatshop in Leicester to product cheap clothing during the pandemic.

The Home Secretary stepped in to probe the issues amid claims the factories were operating without social distancing measures in place with workers not all wearing masks.

Ms Patel called the allegations ‘truly appalling’ and vowed to clamp down on modern slavery in Britain.

The clothing produced by the fast fashion industry also produces more than 92 million tonnes of waste a year, and consumes around 1.5trillion tonnes of water annually.

A study found that fast fashion is harming the planet, and British shoppers were at the forefront of the waste with more garments bought per person per year in the UK than anywhere else in Europe.

Administrator Teneo confirmed that Missguided would continue to trade whilst a buyer was sought.

Teneo’s Gavin Maher said: ‘As we continue to see, the retail trading environment in the UK remains extremely challenging.

‘The joint administrators will now seek to conclude a sale of the business and assets, for which there continues to be a high level of interest from a number of strategic buyers.’

Last week police were reportedly called to its head office in Manchester after suppliers accused the firm of leaving them millions of pounds out of pocket.

Boohoo has been highly acquisitive in recent years and in 2019 the retailer bought Karen Millen, which counts Helena Christensen among its models.

Missguided was founded by Nitin Passi, who set up the firm 12 years ago with a £50,000 loan from his father.

Mr Passi is a fitness fanatic who owns a pink Lamborghini.

Missguided was rescued last autumn by the finance firm Alteri Investors and in recent weeks the company has been trying to secure a sale of the retailer.

The Manchester based company made headlines with its £1 bikini three years ago and has grown rapidly to become one of the UK’s largest retailers. 

It was one of the first to capitalise on celebrity endorsements over social media to promote its clothes.

The sale of Missguided follows weekend reports that retailer Ted Baker is in exclusive talks with Reebok owner Authentic Brands over a sale.

‘We have seen many traditional high street retailers struggling for a number of years, with the pandemic accelerating a move towards online retail, which saw an understandable boom,’ Tom Pringle, restructuring partner at law firm Gowling WLG, said.

‘However, with pandemic restrictions over and in person shopping returning, online retailers are far from immune to the supply chain, inflationary and staffing issues that are plaguing the wider UK economy as a result of Brexit, Covid and the cost of living crisis,’ he added. 

Three suppliers for Missguided warned they are at risk of going bankrupt due to outstanding payments (pictured, Love Island star Mary Bedford poses for the brand)

Three suppliers for Missguided warned they are at risk of going bankrupt due to outstanding payments (pictured, Love Island star Mary Bedford poses for the brand)

Fast fashion brands have been in the spotlight for many controversies since the Covid-19 pandemic, and have also faced profit slumps (pictured, a Missguided model)

Fast fashion brands have been in the spotlight for many controversies since the Covid-19 pandemic, and have also faced profit slumps (pictured, a Missguided model)

It became wildly popular after advertising its range on celebrity dating show Love Island (pictured - the 2021 finalists), and thrived during the pandemic before its sales were hit by the reopening of physical stores

It became wildly popular after advertising its range on celebrity dating show Love Island (pictured – the 2021 finalists), and thrived during the pandemic before its sales were hit by the reopening of physical stores

The rise and fall of Missguided: How firm founded by Lamborghini-driving fitness fanatic tried to lure in ‘fast fashionistas’ with celebs and own reality TV show – but ultimately paid price for low-paid workers, £1 bikinis and Kim Kardashian ‘knock-offs’

Missguided – the women’s only clothes website that fell into administration today – was founded 12 years ago by Nitin Passi, a 39-year-old former public schoolboy who became one of the most recognisable faces in the fast fashion industry. 

Passi, a fitness fanatic who drove a £300million pink Lamborghini, revolutionised online fashion retailing with his focus on social media endorsements by celebrities including Nicole Scherzinger, Sofia Richie and Jourdan Dunn – while tempting millions of young women to buy his products by advertising them on popular TV show like Love Island. 

But he was also known for controversial stunts like the release of a £1 bikini, which attracted heavy criticism from environmentalists and campaigners concerned about low wages in the fast fashion industry.  

Claims of poor labour practices would go on to dog Passi throughout his time at Missguided, alongside a string of other controversies including a copyright lawsuit against Kim Kardashian which saw the firm forced to pay out £2million in damages.  

A Channel 4 documentary two years later coincided with the peak of Missguided’s success – as a boom in online sales during the pandemic helped gain Passi a fortune (listed as £250million by the 2019 Sunday Times Rich List). But the firm would go on to struggle as sales were hit by the reopening of physical stores and the cost of living crisis. 

Nitin Passi with American model Sofia Richie at a Missguided launch party in LA in 2019

Nitin Passi with American model Sofia Richie at a Missguided launch party in LA in 2019 

Passi posing with Jourdan Dunn at a 2017 launch event in London for one of the company's new ranges

Passi posing with Jourdan Dunn at a 2017 launch event in London for one of the company’s new ranges 

Passi in a trailer for Channel 4's Inside Missguided documentary, which aired in 2020

Passi in a trailer for Channel 4’s Inside Missguided documentary, which aired in 2020

How firm had to pay Kim Kardashian $2.7m (£2m) after she accused them of profiting off her image by peddling knock-off looks 

One of Missguided’s many controversies came in 2019 when it lost a major lawsuit against Kim Kardashian after she accused the brand of copying her trendsetting looks without permission.  

In one instance, Kim shared a shot on social media from a fitting where she was dressed in a sizzling gold spandex dress that was designed by her husband Kanye. The star implored fast fashion sites to ‘wait until I wear this in real life before you knock it off.’ 

Shortly after she posted the image, Missguided responded with a shot of their knockoff and even tagged Kim in their caption.

‘The devil works hard but Missguided works harder,’ the caption read beneath a shot of a model who bore a striking resemblance to Kim in an identical dress. @kimkardashian you’ve only got a few days before this drops online.’

Kim later wrote online that it was ‘devastating’ to see fast fashion companies rip off designs that had consumed the ‘blood, sweat and tears’ of ‘true designers’. She originally demanded $10m in damages but was awarded $2.7m by a US judge. 

Passi grew up in Hong Kong, New York – briefly – and Surrey, where he attended £41,000-a-year Cranleigh School. After sixth form he attended Newcastle University, where he studied business management, before working at his father’s fashion wholesaler after graduation. 

Fashion was in his blood, with his grandfather coming to the UK from India in the 1960s to set up a knitwear factory. 

He went on to found Missguided in 2009 with a £50,000 loan from his father, which he reportedly paid back in 6 months. 

Missguided’s marketing would go on to play heavily on its female image, describing ‘female empowerment’ as the firm’s ‘core message’. 

Passi outlined his ambitions for the company in a 2015 interview with the Old Cranleighan Society, calling it a ‘young, fresh and aspirational brand’ that hoped to attract customers with the ‘individualism’ of its designs. 

This strategy enjoyed major success, with Missguided turning over £202million in the financial year ending March 2020, £107.7m of which came from the UK, £48.5m from the EU, and the rest from young fashionistas in more than 170 other countries which the company shipped its products to. 

Channel 4’s Inside Missguided documentary, which aired in 2020, went behind the scenes to explore what life was like for the company’s young, female-dominated workforce at its offices in the heart of Manchester, which featured tech firm-style features like themed meeting rooms and purple ‘chill pods’. 

Cameras filmed a ‘gender reveal party’ inside the office, and insights from employees including the Creative Manager, Treasure, who told how the HQ was where staff ‘s***, live and breathe fashion’. 

But amid increasing criticism of the environmental and social cost of fast fashion – epitomised by the allegations of slave labour against its rival Bohoo in 2021 – Missguided also found itself caught in the crossfire.  

Passi's pink £300,000 Lamborghini, which he covered in stickers showing Pamela Anderson

Passi’s pink £300,000 Lamborghini, which he covered in stickers showing Pamela Anderson 

One of Missguided's many controversies came in 2019 when it lost a major lawsuit against Kim Kardashian after she accused the brand of copying her trendsetting looks without permission. Kim had posted a photo of herself in a new dress, only for Missguided to vow to produce its own version

One of Missguided’s many controversies came in 2019 when it lost a major lawsuit against Kim Kardashian after she accused the brand of copying her trendsetting looks without permission. Kim had posted a photo of herself in a new dress, only for Missguided to vow to produce its own version 

In January 2017, as part of an undercover Channel 4 documentary, the firm was named among a series of fast fashion companies underpaying their workers in factories in Leicester, with staff allegedly receiving between £3 and £3.50 an hour.

At the time Missguided gave a statement to C4 saying it was taking the allegations  seriously and was conducting an internal investigation. In 2018, Passi said the company had reduced its supply base in Leicester from around 80 suppliers to 12.   

That same year, Mr Passi was criticised by Labour MP Mary Creagh for failing to appear in Parliament to face questions from the environmental audit committee, which she chaired. 

Ms Creagh referenced underpayment in British garment factories, pollution and plastic waste in a letter to Passi, which asked him once again to attend the hearing after he sent a deputy in his place. 

Channel 4's Inside Missguided saw office employees talk about its happy work culture, but the company also came in for criticism for the way its clothes were produced

Channel 4’s Inside Missguided saw office employees talk about its happy work culture, but the company also came in for criticism for the way its clothes were produced 

A clip from the Channel 4 documentary showing models during a fashion shoot

A clip from the Channel 4 documentary showing models during a fashion shoot 

Creagh wrote: ‘Given the seriousness of these issues we would expect them to warrant your personal attention as the ultimate decision maker in your organisation. Chief executives from both Boohoo and Asos have accepted our invitation to appear in parliament. We are disappointed that [you] have declined.’

The company also experienced a string of other negative headlines, including selling a jumper with the word ‘slut’ on it in 2015, hanging a ‘send nudes’ sign at its store in Bluewater Shopping Centre in 2017, and in 2020 selling controversial ‘hunger-busting’ pills. 

Despite these controversies, Missguided enjoyed strong sales over Covid and boasted revenues of £287million in the year to last March. 

But recently the business has struggled to make a profit amid supply chain issues, competition from physical stores, and the growth of online rivals. 

Recently the business has struggled to make a profit amid supply chain issues, competition from physical stores, and the growth of online rivals. Pic: A still from the C4 documentary

Recently the business has struggled to make a profit amid supply chain issues, competition from physical stores, and the growth of online rivals. Pic: A still from the C4 documentary 

In December it had to be rescued by the finance firm Alteri Investors, and earlier this year Passi stepped down as chief executive and appointed consultancy Teneo to find a buyer or shut the business down.

The online retailer had been in talks with Boohoo, JD Sports and Asos but none of them finalised a takeover. Today it fell into administration after a winding up petition from its suppliers – to which it still owed millions. A total of 330 jobs are believed to be at risk.           

https://www.dailymail.co.uk/news/article-10870449/Online-fashion-chain-Missguided-plunges-administration-putting-330-jobs-risk.html

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