Key Points
- Bangladesh-based companies have been doing business with Mosaic Brands for several years.
- Experts say Mosaic Brands struggled in retail due to rising competition from online 'fast fashion' outlets including Temu and Shein.
- FTI Consulting has been appointed as administrator, while KPMG will act as receiver and manager.
Mosaic Brands Limited is one of Australia’s largest fashion retail groups. Its 'fast fashion' — inexpensive, low-quality clothing which mimics high-end brands and styles — labels include Millers, Rockmans, Noni B, Rivers, Katies, Autograph, W Lane, Crossroads and Beam.
According to Bangladesh Garments Manufacturer and Exporters Association (BGMEA) sources, 23 Bangladeshi exporters are affected as the company enters voluntary administration.
FTI Consulting has been appointed as administrator, while KPMG will act as receiver and manager. Together they will assess whether Mosaic can be reorganised and continue operations or whether liquidation is necessary.
Director of one of the supplier companies, Padma Shatil Arab Fashions Limited, Jabed Hossain Bhuiyan, said: "My factory — Arab Shatil Fashions Limited — had an order of $2.55 million. Of that, we have exported $1.8 million worth of goods, but we are not getting payment for them ... the remaining $800,000-$900,000 worth of goods are in our factory. The entire amount is stuck."
"About 23 of our factories have applied to the High Commissions of Australia and Bangladesh and many related places for the outstanding dues ... we did not receive much response."
We are not really getting any hope, or any confidence. We are worried that many suppliers are on the verge of bankruptcy because in a competitive market, many factories do not have the capacity to overcome such huge losses.Jabed Hossain Bhuiyan, director, Padma Shatil Arab Fashions Limited
Bhuiyan told SBS Bangla that he had also met with KPMG, Mosaic’s receivers in Sydney, but had not received any further communication.
"Millions of dollars (worth of goods) are stuck here from many suppliers including (in) Bangladesh, India (and) China," he said.
When contacted by email, KPMG said it had served notices to meet with suppliers and was working to recover as much as possible from Mosaic Group Brands.
When contacted, a spokesperson from FTI Consulting said Bangladesh-based suppliers were represented at meetings with suppliers owed funds however the voluntary administration process was ongoing.
BGMEA said it had contacted the Australian High Commission in Dhaka three times.
Former BGMEA director Mohiuddin Rubel said he was working on this issue and had contacted 23 member companies regarding their dues.
We hope (the receivers) will give priority to our companies … otherwise, it will affect the reputation of Australia and their brands.Mohiuddin Rubel, former BGMEA director
"Although they admitted that these companies would face a dire situation regarding their dues, the Australian High Commission in Bangladesh said that they have nothing to do with trade. However, they have advised that these factories of ours can take legal action if they want to," Rubel said.
To avoid such situations in the future, he advised exporters to check their histories in terms of dues during such work especially if they were working with new buyers.
Rubel added unrest was expected when workers were not paid because companies were unable to receive their dues.
A concerned official at the Bangladesh High Commission in Australia told SBS Bangla: "We have been working on this issue for several months. We have been in touch with the receiver and voluntary administrator organisations. However, the High Commission cannot be directly involved in collecting the dues."
The official advised BGMEA to contact Mosaic's voluntary administrator, FTI Consulting.
What caused the collapse?
Bangladesh-based companies have been doing business with Mosaic Brands for several years.
"We used to work with Mosaic Brands on a 120-day sales contract, meaning we would receive payment within 120 days of export, which is known as a bill of lading, but they did not follow this rule," Bhuiyan said.
"The brand is citing financial difficulties (as the reason) for not following this rule. They are now asking exporters for discounts of up to 60 per cent."
(Representative image) A garment worker works at a textile factory in Dhaka, Bangladesh. Credit: AAP/EPA/MONIRUL ALAM
The ACCC issued infringement notices for "excessive and lengthy delays" in delivery of products to customers purchased from its websites to the company between May 2021 and September 2022, resulting in a fine of nearly $900,000 ($896,400).
The situation at Mosaic Brands puts thousands of jobs at risk, as well as the businesses of Bangladesh exporters. The company, which employs 2,700 people, is facing challenges, including supply chain disruptions, and declining sales.
In recent months, the company has closed several brands as well as 200 stores as part of its downsizing efforts.
Dr Saniyat Islam is a senior lecturer in Fashion Enterprise and Sustainable Innovation at RMIT University.
The debt consolidation process of large companies was quite lengthy and there was no 'easy fix', and the legal system in Australia needed to be understood.Dr Saniyat Islam, RMIT University
Referring to Mosaic’s business model, he said that in this era of e-commerce, the brand had not focused as much on retail as it had on online sales.
"It is not good for suppliers in countries like Bangladesh to be stuck (getting paid), which could have a negative impact on the country's (entire) garment industry," he said.
Dr Carol Tan is a senior lecturer in the School of Fashion and Textiles at RMIT University and the program manager of the Master of Fashion department.
She outlined the main reasons why Mosaic Brands was struggling in the current competitive retail market.
Mosaic's rapid expansion had limited its resources, and it relied on a traditional retail model, but that model failed in an e-commerce-driven market.Dr Carol Tan, RMIT University
She pointed out that the rise of online and other 'fast fashion' retailers such as Temu and Shein, coupled with changing consumer preferences, had intensified competition.
Legal challenges, particularly the action taken by the ACCC for delivery failures, had further damaged the company, she added.
Dr Tan stressed that today's successful brands were highly proactive, emphasising product sustainability and community engagement. They built strong relationships with customers, aligned themselves with consumer values, and adopted responsible practices such as limiting production to avoid overproduction and discounting.
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