Adelaide-based fashion retailer Australian Fashion Labels has collapsed into voluntary administration, putting 57 jobs at risk as the COVID-19 pandemic continues to put pressure on Australia’s retail sector.
Marcus Ayres and Brett Lord of Duff and Phelps were appointed as voluntary administrators of the business on Wednesday and are now seeking a buyer or the necessary capital to keep the business viable in the future.
The business, which specialises in affordable luxury apparel, is home to four in-house fashion labels including Finders Keepers, C/MEO Collective, Keepsake and The Fifth, as well as the online retailer Bunker Online.
“First and foremost, we’re trying to save the business and the employees’ jobs and the outcome of that will be favourable to the creditor base,” Ayres tells SmartCompany.
Ayres says a timeline of 48 hours was set to recapitalise the business after it went into voluntary administration on Wednesday.
“There are many things that need to be done over the next 12 hours, so it’s a critical time that we’re in,” he says.
While the business had previously operated from shopfronts, it was restructured to sell entirely online, and according to Ayres, the cost of those past efforts to streamline the business has contributed to the voluntary administration.
“The legacy of those restructuring costs, plus the impact of COVID-19 on sales have become an increasing hang on the business,” he says.
Founded in 2007 by Melanie and Dean Flintoft, Australian Fashion Labels grew its offering from one to five in-house labels between 2007 and 2016, before dropping back to four brands.
The business evolved from Melanie Flintoft’s first label, Little Potty Red Shoes, which she founded in 2002.
Clothing, footwear and personal accessories retail rose 14.4% in October 2020, compared to the previous month, however, this gain followed several poorly performing months between January and April, according to ABS data.
Speaking to SmartCompany, retail expert Gary Mortimer, of Queensland University of Technology’s Business School says he is not shocked to see another fashion business collapse into voluntary administration.
“It’s not really surprising. We’ve certainly seen much bigger organisations go into voluntary administration over the last few years, such as Pumpkin Patch, and there has certainly been others,” Mortimer says.
Mortimer says while retailers across the board were challenged in 2020, the footwear, fashion and accessories sector has faced significant pressure.
“This is another example of a small-sized retailer that hasn’t been able to weather the challenges of the COVID-19 lockdown,” he says.