Missguided’s lack of competitiveness was the key factor in its demise, says GlobalData

Following the news that Missguided has fallen into administration; Darcey Jupp, Apparel Analyst at GlobalData, a leading data and analytics company, offers her view: “While media reports have linked Missguided’s demise to increased sustainability issues, it is clear from the continued growth of its rivals that its failure is down to its own lack of competitiveness rather than sudden fall in demand for fast fashion.

“The true reason for its demise was its lack of competitiveness with the likes of Shein and boohoo. While many UK pureplays have struggled to continue their pandemic momentum in 2021 as in person shopping returned, Missguided has slipped further than most, with its lack of high-profile celebrity collaborations and uncompetitive pricing contributing to the brand losing the lucrative attention of young shoppers in the UK fast fashion market.

“Missguided’s failed venture into physical retail would have certainly put another nail in the coffin, as the brand opened expensive and uninspiring stores that were unable to maintain footfall, leading to their subsequent closures. While its launch of concessions in some ASDA stores had the potential to be successful, this was evidently not enough to rescue the struggling brand.

“At present, the boohoo group appears to be the frontrunner to rescue Missguided, and this acquisition certainly has the potential to revive the brand. The boohoo group has a reputation of rescuing struggling apparel players, and its similar proposition means it is best-placed to take on the Missguided brand than the other interested players, including JD Sports and ASOS.”

Sean Moran, partner and restructuring specialist at law firm, Shakespeare Martineau, said: “Missguided has been struggling for a while and it seems that one of the company’s suppliers has finally pushed the nuclear button and presented a winding up petition. Missguided is a high profile key player in the fast fashion industry and at a time when a perfect storm has been brewing for the sector, this announcement is sure to make other retailers in the sector nervous.

“Whilst the company attempted to restructure earlier this year, things clearly have not gone to plan. A number of factors, including supply chain issues and enforced Covid lockdowns in the Far East have led to a downturn in trade. In the UK, retail sales are also being affected by the looming cost of living crisis, which is causing everyone to tighten their purse strings.

“Various options, including a sale of the business, apparently remain on the table but whilst any sale of Missguided’s business will present a significant opportunity to a competitor to rapidly expand its market share, it is less certain what value would be generated for Missguided’s creditors.

“Now more than ever, businesses in the sector should remember that cash is king to ensure their survival. Maintaining a tight control over cashflow and a regular dialogue with creditors is hugely important – in Missguided’s case, it seems as if there was a breakdown in communication with key suppliers. When implementing a restructuring strategy, it is also important to remember that securing early professional advice is key to a successful outcome.”