Mosaic to wind down five brands amid retail challenges

Mosaic Brands has announced plans to close several of its clothing store chains as part of a restructuring effort.

The plan involves shutting down Rockmans, Autograph, Crossroads, W.Lane, and BeMe stores. Mosaic aims to redirect resources to strengthen its other brands, including Noni B, Rivers, and Katies, which are struggling to stay relevant in the current retail landscape.

This move comes as Mosaic faces financial difficulties, with suspended shares and unpaid bills to suppliers in Bangladesh. The company's troubles stem from a sharp decline in sales due to reduced consumer spending and increased competition from fast fashion giants and online retailers.

Fast fashion players like H&M, Uniqlo, and Zara have redefined the industry by targeting Mosaic's traditional middle-market customers with cheap, trendy options. Online retailers such as Amazon and Temu have also made it harder for Mosaic's e-commerce ventures to grow.

The retail sector has shifted from biannual collections to fortnightly merchandise drops, putting pressure on traditional retailers like Mosaic. The company was hit hard by the Covid-19 pandemic and has since faced issues with landlords over unpaid rent and supply chain problems that affected key sales periods.

Mosaic's financial situation has worsened, with net cash inflows dropping from $19.8 million in the first quarter of 2024 to just $6.6 million in the June quarter. The company expects to report a statutory loss for the financial year, though its final audited accounts have been delayed.

CEO Erica Berchtold stated that divesting "non-core" brands would help simplify the business and focus resources on core brands with distinct market propositions.

The challenges faced by Mosaic highlight broader implications for the retail sector, particularly in Australia's shopping centres. The company's struggle to compete with fast fashion giants has led to a significant increase in stock units and a shift towards larger, more experience-focused stores.

However this strategy has environmental costs, with products becoming less durable and designed for short-term use. Similar trends are observed in New Zealand, where local retailers are finding it difficult to compete with low-cost, high-volume models.