The European fashion and retail industry has faced a challenging period in recent years, with several notable restructurings / bankruptcies. This trend is mirrored by a broader economic context, where bankruptcy rates in the European Union have seen significant fluctuations.
While the overall EU bankruptcy rate averaged -0.15% from 2015 to 2024, it reached a peak of 13.20% in the second quarter of 2023 and a record low of -20.50% in the second quarter of 2020. These fluctuations reflect the impact of various factors, including the COVID-19 pandemic, economic downturns, and rising costs.
Several prominent fashion and retail companies have filed for bankruptcy in recent months:
◾New Guards Group
The Farfetch-owned Italian fashion production and distribution company, known for brands like Off-White, Palm Angels, and Heron Preston, filed for a ‘composizione negoziata per la soluzione della crisi dímpresa’ (or CNC), a restructuring process for companies in financial distress that was introduced in Italy in 2021. This proceeding, which differs from traditional insolvency procedures, will allow NGG to maintain its market presence.
◾Esprit Europe
The German fashion retailer filed for insolvency, following similar moves by its Belgian and Swiss subsidiaries. Rising costs and weak consumer sentiment were cited as key factors. Esprit Europe was the parent company for Esprit in Austria, Belgium, Denmark, France, Germany, Poland and the United Kingdom.
◾Re:NewCell: The Swedish textile recycling company, known for its innovative Circulose technology, filed for bankruptcy due to liquidity issues. However, it was later acquired by Altor, securing its future.
◾The Body Shop
The cosmetics retailer collapsed into administration in the UK, shortly after being acquired by Aurelius. Fortunately the iconic brand has been rescued recently by consortium, Auréa Group securing the future for 1,300 workers
▶The foregoing instances highlight the increasing pressure on the fashion and retail industry, driven by factors such as economic uncertainty, changing consumer preferences, and the need to adapt to sustainable practices.
As the industry continues to evolve, companies will need to adopt innovative strategies to navigate these challenges and ensure long-term viability.
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