Major retailer closes 200 stores, axes five fashion brands

The well known retailer is axing some of its most recognisable brands as it tries to deal with a financial fallout.

One of Australia’s biggest fashion retailers will close more than 200 stores and shut down five of its brands as it struggles financially.

Mosaic Brands, an ASX-listed company, announced the axing of its fashion outlets Rockmans, Autograph, Crossroads, W.Lane and BeMe brands, including all stores and websites. It is unclear how many jobs will be affected at this stage.

The brands Rockmans, Autograph and W.Lane have more than 200 stores across Australia, Mosaic Brands’ 2023 annual report said.

The company currently employs 4000 staff and has approximately 700 stores around Australia.

It comes at a torrid time for the retailer which already closed hundreds of stores last year, while the company has also been suspended from trading on the ASX after it missed a key deadline for reporting its annual results.

Rockmans, Autograph and W.Lane have all been axed. Picture: Supplied

Mosaic CEO Erica Berchtold said the group would cut its brand portfolio to drive simplification across the business and focusing resources.

“Mosaic will wind down five brands which have become marginal and non-core, allowing us to focus on five core growth brands,” she said.

“Each of those core brands will have a clearly differentiated market proposition, target customer, price point and product range.”

Alarm bells had already been sounded for the major Australian retailer after it announced a trading halt in August and revealed it had engaged Deloitte to advise on “refinancing considerations”.

Scott Evans, former Mosaic Brands CEO, new CEO Erica Berchtold, Mosaic Brands chair Richard Facioni. Picture: Supplied

Mosaic Brands said in its announcement that it would turn its focus on investing in its other fashion brands including Millers, Noni B, Rivers and Katies, along with a stand-alone online Mosaic marketplace.

“Whilst the operational details of the rationalisation plan, including store closures, continue to be worked through, we will seek to minimise the impact on our team, including where possible reassigning impacted team members into roles within the five core brands,” added Ms Berchtold

Queensland University of Technology Business School retail expert Professor Gary Mortimer had previously flagged that Mosaic Brands were likely to close a couple of hundred stores and axe some of its brands after its financial woes emerged last month.

Autograph stores and the brand will be closed for good. Picture: NICK CLARK

He had warned that the likes of Millers, Katies and Noni B, alongside it’s other fashion outlets, were essentially creating multiple brands to market to the exact same audience – middle aged, middle class woman.

“These women all shop at the same stores so you are cannibalising your own market. If you walk into a shopping centre, you will find at least two, if not three, of those brands all competing for the same customer and that just duplicates and triplicates the cost of doing business,” he told news.com.au last month.

“As you are not only selling the same product to the same consumer but then you have different brand’s costs like staff, advertising and logistics, so the cost structure doesn’t appear to be sound.”

It will focus on brands like Noni-B. Picture: NCA NewsWire / Steven Saphore

Central to the company’s strategy to retain existing customers and attract new ones was continuing to focus on servicing regional Australia, Ms Berchtold added.

Yet, a botched technology rollout just before Mother’s Day this year which delayed delivery of stock, as well as the cost of living crisis impact on consumer spending would “severely impacted revenue and earnings in the fourth quarter,” Mosaic revealed in June.

In its latest ASX announcement, it said it was working on finalising its results for 2024 financial year and expects its shares to be lifted from suspension following lodgement.

“Mosaic has made considerable progress over the past few weeks to accelerate its plan to realign and simplify its operations … This includes rationalising the group’s brand and store portfolio, with a view to reducing costs and improving its working capital position,” it added.

But Mosaic Brand’s performance hasn’t been consistent over a number of years, Prof Mortimer said.

A previous Rockmans fashion campaign. Picture: Facebook

When the pandemic hit, the company recorded a $170.5 million loss, despite $736.8 million in revenue in 2020.

Then it announced an $11.5 million loss in 2022, before recording a profit of $1.2 million in 2023 – yet there was also half a billion in revenue across both years.

During covid, Mosaic Brands were forced to close all their stores but took an $83 million wage subsidy from the government, Prof Mortimer added.

“Like many other retailers and organisations, it helped prop up their profit and produced strong results in 2021. Then they hit a fairly significant issue – a $630,000 fine at the end of 2021 for making claims about some of their products would keep you safe from covid,” he said.

“In 2023, they tried to right the ship by closing 250 stores and there were claims they would create mega stores. Closing stores certainly reduced wage costs and logistic costs as they didn’t have to ship products to stores that weren’t selling.

“They had a solid profit result in 2023 and now we see a warning that they will announce a loss for the 2024 financial year. Their results tend to peak and then drop quickly and there doesn’t seem to be much consistency.”

The Australian Competition and Consumer Commission has also launched a federal-court case alleging Mosaic Brands failed to deliver orders within advertised time frames, or within a reasonable time frame, or not at all. The company is defending the court action.