The owner of popular Australian fashion labels Ksubi, Insight and Something Else has been placed in voluntary administration, as the group prepare for a restructure.
Sydney-based company Bleach Group entered administration on August 27. It now has a new corporate ownership thanks to a share placement from an unnamed US private equity group.
Bleach Group says the move was motivated by the closure of its Asian-based supply chain.
“The need for a voluntary administration… is regrettable,” chief executive Mark Byers said in a statement.
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“The restructure was necessary to ensure the future of the Ksubi and Insight brands and more than 100 jobs globally and we can now look forward with confidence.”
In 2010, Bleach Group saved Ksubi, which was co-founded by fashion entrepreneur Dan Single, from going into liquidation.
It is understood Bleach Group is still trying to pay down Ksubi’s multimillion dollar debts, which at the time had been attributed to poor margins.
Ksubi (formerly known as Tsubi) had been renowned for its outlandish runway stunts, including releasing live rats on a fashion runway, and lavish parties.
Earlier this year ASIC banned Single from managing or directing a company for three years, after administrators found Ksubi had traded while insolvent.
Despite Ksubi’s new owner seeming to be going through its own financial difficulties, Byers says the administration is a positive step for the retailer.
“With growing competition from international labels and online sales, and rising sourcing costs in Asia, it has been a difficult time for the fashion industry. Despite this, our brands had been performing well until the supply disruption.
“The outcome is a positive one for the Ksubi and Insight brands, our domestic and international employees, contractors and sub-contractors, retail and wholesale distribution partners, and the wider Australian fashion industry,” he says.
New season stock for the brands is still expected to be delivered on time, as Bleach Group has secured a new offshore supply chain.
“Both Ksubi and Insight are sought-after in the youth markets in Australia, Europe and the United States – losing them would have been a blow to the Australian industry, and meant the loss of many direct and indirect jobs in Australia and overseas,” Byers says.
SmartCompany contacted Bleach Group, but no further comment was available. Administrators Vincents Chartered Accounts were also contacted, but were not available to comment.
Bleach Group, which distributes, designs and produces fashion items and accessories across Australia, the United States, Europe and Asia, is just one of many fashion retailers to experience a significant downfall in the past few years.
This year alone has seen the collapse of popular designer labels Lisa Ho and Kirrily Johnston.
IBISWorld figures from June 2013 show the $12.2 billion fashion industry has declined at a rate of 2.2% over the past five years.
Key factors contributing to the decline of the industry include cautious consumer spending, increased competition for overseas retailers, higher rent costs and aggressive price-cutting strategies.
“Since the economic downturn, consumer spending behaviour has changed and clothing retailers have suffered,” IBISWorld says in a report on the industry.
“Prices have been driven lower by fierce competition and the surging Australian dollar.”