The Manchester tycoon behind Missguided is battling to rescue the fast-fashion retailer as it risks becoming an early casualty of international supply chain convulsions.
Nitin Passi, the multimillionaire who set up Missguided with a £50,000 loan from his father 11 years ago, has hired City crisis experts from AlixPartners to review radical options to restructure the company, sources told the Sunday Telegraph.
Mr Passi, 38, is believed to be seeking an emergency £50m injection from outside investors as Missguided struggles under a squeeze on its supply chain, with price rises and logistical chaos combining to threaten its future.
Another option could be to sell the business to a fast-fashion rival in a cut-price deal. City sources suggested Asos, Zalando, Chinese firm Shein and Aim-quoted In The Style as potential buyers.
Missguided’s large wholesale customers, which include Asos and Asda, are taking longer to pay, heaping pressure on the company’s finances, City sources said.
The appointment of restructuring experts follows a 10-month attempt to sell the business or find new backers. Missguided hired Rothschild to sell earlier this year but talks with JD Sports are believed to have stalled, although could yet be spurred on.
It was unclear this weekend how much time Mr Passi had to find a solution. Missguided’s suppliers have demanded earlier payments, as their own cash flow comes under pressure from widespread delays in shipping caused by the pandemic.
Mr Passi, a self-styled fitness fanatic who owns a pink Lamborghini, claimed to have repaid his father’s loan within six months. Missguided was one of the first to capitalise on social media, with celebrity endorsements from the singer Nicole Scherzinger and model Sofia Richie key to its success with young consumers.
However, Missguided was among a number of fast-fashion retailers accused of paying staff between £3 and £3.50-a-hour according to a Channel 4 Dispatches documentary in 2017.
Mr Passi, whose fortune reportedly peaked at £250m, was reprimanded a year later for refusing to appear in front of a parliamentary inquiry into the fast fashion industry. A Missguided supply chain executive attended instead.
Missguided’s difficulties will come as a blow to its 400 staff, many of whom are based near the company’s headquarters in Manchester. Originally an online brand, the retailer hit trouble after diversifying into bricks and mortar before closing stores in Westfield Stratford City and London’s Bluewater.
Sales have been largely flat over the last four years at around £200m. The business last turned a profit in 2016 with pre-tax losses of £8.3m in 12 months prior to the pandemic hitting in March 2020, its most recent financial year.
Missguided’s debts have grown, meanwhile, with loans swelling to £70m. Some £14m of this was a debt owed to shareholders including Mr Passi. The debt was due to be repaid last month.
Bosses at the firm said the low pay allegations in 2017 had served as a “wake-up call”. Paul Smith, head of sourcing, said: “Yes, we were a young business, growing rapidly and trying to meet the needs of young women wanting to buy the latest trends online, at a low cost, but that window behind-the-scenes prompted us to be a better business.
Missguided did not respond to requests for comment.Internet Explorer Channel Network