ASX-listed women’s clothing business with $8 million turnover collapses

Women’s clothing business UnderCoverWear, which turned over more than $11 million in 2013, has collapsed following “difficult times” for the company.

Administrators Ginette Muller and Lachlan McIntosh of FTI Consulting were appointed to the business on March 6, with a meeting for creditors to be held on March 18 in Bella Vista, NSW.

The 33-year-old business creates underwear, nightwear and women’s apparel that is sold through a personal-party “hostess” structure in people’s homes as well as catalogue and online sales.

Muller told SmartCompany that a head office restructure last week “unfortunately made 12 staff redundant”.

“A core group remains, consisting of key accounting, marketing and sales personnel. Despite this, it is business as usual with over 300 consultants, actively pursuing our sales goals on a daily basis,” she says.

The significance of its current debts was not year clear.

Muller says after the first creditors meeting that “We expect to know more at this time, including the likelihood of of recapitalisation.

The ASX-listed business posted a net loss of $1.36 million for the 2013 financial year, with chairman Stuart Richardson describing the business as “operating in difficult times” in its annual report.  

The figure was worse than its 2012 financial year loss of $603,594.

It reported that the full year loss was partly attributed to reduced stock holding and delays in the replenishment of popular sizes.

Revenue for the full year to June 30, 2013 was $8,016,760, down from the 2012 financial year figure of $11,493,915.

The company gained a capital injection on September 12, 2013, from The Clothing Group Limited to raise $432,000, which was subject to shareholder approval in late November last year.

On September 13 last year, the business appointed a new chief executive officer, Montgomery Grant, who reportedly has 30 years of experience in the clothing industry.

He replaced Richard Lowry, who resigned after two years at the helm.

Lowry said in the annual report that the business had relocated its premises in late 2012 to reduce rent expenses by 27%, and it had reduced its bank overdraft from $1.2 million to $200,000 in that time.

It said that despite the decline in revenue, the business had maintained its gross profit margin at approximately 40%.

The business began 33 years ago in Sydney and manufactures its products in Australia and New Zealand, offering garments from size six to 28.

The news follows the collapse of online fashion business Jasu earlier in 2014, with a number of well-known fashion brands among its creditors.

Note: This story was updated on March 14 with comment from the administrators.