Missguided UK administration: why did firm collapse, who is owner Nitin Passi, how much did Frasers Group pay?
The fast fashion brand sponsored hit ITV show Love Island in 2018, and principally targeted young female consumers with its clothing ranges
Missguided is a digital fast fashion retailer that went into administration on Tuesday (31 May) (image: AFP/Getty Images)
The demise of Missguided marked a dramatic fall from grace for the fast fashion brand.
From the high of being Love Island’s main sponsor, its collapse into administration in May 2022 marked the end of its life as an independent business as it was bought out by Sports Direct owner Frasers Group.
Missguided’s collapse was the latest of several high-profile casualties in recent months, including Studio Retail Group (which was also the subject of a buyout by Frasers Group) and the McColl’s convenience store chain.
So how did the company get into this position, what does the buyout mean and what’s the brand’s new name?
What is Missguided?
Missguided is a fast fashion firm based in Manchester.
Fast fashion is a term for quickly mass-producing recent catwalk trends and high-end designs at a low cost.
Missguided has been primarily aimed at Millennials and Gen-Z shoppers, with its clothing targeted at social media and frequently appearing in and around TV shows, like Love Island - a show it sponsored in 2018.
The firm had employed around 800 staff in the mid-2010s, but its headcount was believed to have fallen to 330 by the time of its collapse.
Who is Missguided CEO Nitin Passi?
Entrepeneur Nitin Passi founded Missguided in 2009 with a £50,000 loan from his father, who was a fashion wholesaler.
Mr Passi, 39, was then able to capitalise on the boom in online fashion seen in the early 2010s.
In the 2019 Sunday Times Rich List, he was listed as having a net worth of £250 million.
The entrepeneur was forced to step aside as CEO of the brand he founded in April 2022 as part of a bid to spark a turnaround in the company’s fortunes.
Mr Passi was then reinstated as chief executive by Frasers Group in June 2022.
Why has Missguided gone into administration?
Missguided had been having issues for several years in the run up to its fall into administration.
In 2018, Missguided consulted on redundancies after posting significant losses.
A failed experiment with physical stores and questions about the sustainability of fast fashion appeared to create issues for the brand.
Then, in autumn 2021, the company was saved by investment firm Alteri, which then announced a review of its business model in December as it tried to turnaround the business.
This review culminated in 63 redundancies and Mr Passi stepping down as CEO in April 2022.
However, attempts to find a potential new buyer were unsuccessful.
In late May, reports emerged in the i newspaper that Missguided was on the brink of collapse as it owed suppliers millions of pounds.
A winding-up petition had been filed against it on 10 May by one of its suppliers, JSK Fashions, while police had to be called to the ailing company’s headquarters when out of pocket suppliers turned up to demand their money.
Missguided told the i: “Missguided is aware of the action being taken by certain creditors of the company in recent days, and is working urgently to address this.
“A process to identify a buyer with the required resources and platform for the business commenced in April and we expect to provide an update on progress of that process in the near future.”
Missguided’s main issues have stemmed from rocketing supply costs, broader inflationary pressures and waning consumer confidence in the increasingly competitive online fashion retail space.
According to the Office for National Statistics (ONS) Consumer Prices Index, clothing prices have contributed significantly to the highest inflation rate seen in the UK for 40 years.
It has also suffered from scandals that have hit the wider fast fashion industry in recent years relating to worker conditions.
In 2017, Channel 4’s Dispatches programme alleged one of its suppliers was paying staff a minimum of £3 an hour - a figure well below the minimum wage at the time.
Missguided also courted controversy in 2019 for selling a bikini for just £1 - a move which critics argued encouraged a throwaway fashion culture in the UK, although CEO Mr Passi argued it was a loss-leading marketing stunt that hadn’t involved any “shortcuts”.
How much did Frasers Group buy Missguided for?
Missguided appointed administrators Teneo to run the administration process on Tuesday 31 May.
Teneo was previously involved in the administration of Studio Retail Group, which was eventually rescued by Mike Ashley’s Frasers Group.
It said the business would continue to trade during the process, and added that its collapse demonstrated how “extremely challenging” retail is at the present moment in the UK.
On Wednesday 1 June, it was announced Frasers Group has beaten the likes of fast fashion brand Boohoo, Asos and JD Sports in securing the buyout of Missguided.
The Sports Direct owner has bought the intellectual property of the brand and its sister company Mennace - an online retailer of menswear - for £20 million, and says it intends to run Missguided as a “standalone” brand within its wider group.
Missguided’s remaining assets look set to be sold off separately and the business will remain in administration for a further eight weeks.
Michael Murray, who replaced Mike Ashley as chief executive of Frasers Group in May, said: “We are delighted to secure a long-term future for Missguided, which will benefit from the strength and scale of Frasers Group’s platform and our operational excellence.
“Missguided’s digital-first approach to the latest trends in women’s fashion will bring additional expertise to the wider Frasers Group.”
On 5 July, Missguided’s official name at Companies House was changed to MGL Realisations (2022) Limited by Frasers Group.
But it will still trade as Missguided.
What is the Missguided returns policy now the company is in administration?
Teneo Financial Advisory, the administrators currently running Missguided, told customers that the brand is unable to honour any refunds that were requested before they were appointed.
In an email or text shared by shoppers on social media, customers have been told that Teneo is also unable to “process new returns/refunds in this scenario”.
Customers have reacted with disgust to the news.
The email or text from Teneo to customers reads: “We will not be able to honour any pre-appointment refunds requested and not yet settled.
“In this case, you can make a claim in the administration process.”
Customers are then advised to email [email protected] to make a claim.
Typically, customers are often among the last on the list of creditors to receive repayments if a company goes bankrupt.
The email or text also warned customers that making the claim “is not akin to a full refund and a payment back to customers at the end of the administration is likely to be a small fraction of the original amount owed, if any is available at all”.
Customers have been advised in the same email from Teneo that the “best option” to obtain a refund is to make a claim via their credit card or buy-now-pay-later providers.