By Jessica Yun and Anne Hyland
Embattled retailer Mosaic is escalating a dispute with at least one of its suppliers owed more than a million dollars as it axes five of its nine brands and hundreds of staff amid a scramble to keep the unprofitable business afloat.
Mosaic chief executive Erica Berchtold said the group would shut down the brands – Rockmans, Autograph, Crossroads, W.Lane and BeMe – nationally, as part of a broader effort to simplify the retailer’s portfolio, and instead focus on its remaining stores including Katies, Noni B, Rivers and Millers.
Mosaic declined to confirm the exact number of stores that would close or how many staff would be affected.
The company has hundreds of stores spanning those brands across the country: Rockmans has 150 stores, Autograph has 49 stores and W.Lane has 32 stores, coming to 231 in total. Each of their websites would be shut down.
Mosaic Brands owns Rivers, Katies, Rockmans and Noni B.
Mosaic has also been in negotiations for the past two months with dozens of its global suppliers in Bangladesh, India and China, who are owed tens of millions of dollars, seeking to renegotiate payment terms.
Some suppliers, who have been asked to accept reduced payments, have declined. In some instances, those suppliers have been asked by Mosaic to accept terms where they would be paid half or one-third of what they were owed in monthly instalments over three years.
Mosaic is understood to owe as much as $US15 million to suppliers in Bangladesh.
Omar Chowdhury, managing director of Bangladeshi garment manufacturer Hydroxide Knitwear, said Mosaic sent him a proposal on August 19, where it offered to pay $US787,395 it owed his business in four instalments.
He declined stating that the agreement offered no guarantee Hydroxide Knitwear would be paid. Chowdhury, whose company has engaged ERA Legal in Australia, said after he refused the proposal he received a letter from Mosaic dated September 25, in which it made a counterclaim against Hydroxide for $US1.38 million.
Mosaic made the $US1.38 million claim against Hydroxide Knitwear for late delivery of products or defective products. Mosaic management, through a spokesperson, declined to discuss the letter.
Chowdhury, who said Hydroxide Knitwear works with the owners of global brands such as Zara, Mango and Jack & Jones, said he had never had such difficulty with a retailer before. Hydroxide Knitwear employs 4000 staff.
“These are totally unilateral claims they’ve made, none of which I’ve accepted. They’re using this claim to stop my payment,” he claimed.
“They acknowledged that they owed me the money, and they offered me a payment plan.”
Chowdhury said some of the Bangladeshi suppliers that hadn’t been paid by Mosaic were under immense financial pressure. “There’s going to be factories that are going to be shutting down,” he claimed. “There’s going to be workers who earn $US200 a month, and they’re not going to get paid. It’s very distressing. There are some people on the verge of suicide.”
Hydroxide Knitwear has since issued Mosaic with a statutory demand for the debt it’s owed.
At least 11 factories in Bangladesh are owed $US8.62 million ($12.3 million), with the real figure likely closer to $US15 million, this masthead has been told. At least three Bangladeshi suppliers have discussed with this masthead the negotiations and payment terms that Mosaic have proposed to them but have not been accepted.
Mosaic shares remain suspended on the Australian Securities Exchange after the company failed to file its financial accounts twice as it attempts to manage costs and loss of sales.
Mosaic Brands has cycled in and out of profitability in recent years and was caught on the back foot during the pandemic lockdowns and was forced to rapidly improve its e-commerce offering. Cash flow has also been constrained by lower spending by consumers affected by cost of living pressures.
“Mosaic will lodge its appendix 4E and audited annual financial report once they are finalised,” the company said. “The delay is due to events after the reporting period, which will impact the disclosures accompanying the audited results.”
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