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Burberry, Gucci, Bottega Veneta and Prada are among the creditors owed £36mn after Matchesfashion collapsed, with hundreds of suppliers likely to receive less than a penny in the pound.
The luxury brands are among more than 500 unsecured creditors to Matches, the ecommerce site bought by Mike Ashley’s Frasers group in December and which was placed in administration last month.
They are unlikely to be paid back, the administrators at Teneo said in a report this week; if they are the amount would be “very low . . . less than a penny in the pound”.
“On present information, it is unlikely that sufficient funds will be realised to enable a distribution to be made,” according to documents filed at Companies House.
Gucci was owed £553,338, Burberry £467,525, Bottega Veneta £326,564 and Prada £281,069, among other established and burgeoning luxury brands.
However, the administrators said they expected to pay in full almost £300,000 to employees and £1.2mn to HMRC.
Matches was bought by Frasers for £52mn in December. When Matches when into administration, Frasers said that it had “consistently missed its business plan targets and, notwithstanding support from [Frasers], has continued to make material losses”.
Teneo said that since it was appointed, it had received 11 offers for parts of the business, and that it was now negotiating with prospective suitors “to achieve the optimum outcome” for stakeholders.
The administrators slashed 264 jobs on appointment, retained 265 and more than a dozen have resigned since then. Staff were also forced to vacate its offices in London last month while the administrators have sold off the furniture.
For many smaller brands stocked by Matches, the collapse of the business has been a blow. Matches has owed Alighieri, an independent London-based jewellery brand, about £70,000 since October, according to founder Rosh Mahtani.
Matches also still has Aligheri stock in its warehouse, which Mahtani is now unlikely to recover, but which is continuing to be sold on the ecommerce site. “Every single independent brand I know is having a really hard time right now,” she said.
After Frasers bought Matchesfashion, it quickly implemented several strategic decisions that appeared to backfire. Frasers did not pay about 200 brands, which in turn refused to send new inventory. Under its new owner, Matches also cut VIP perks and free shipping, and pushed brands for up to 30 per cent discounts in order to get paid.
Sales plummeted in January and February. The discounting in particular irked brands, leading labels such as Kering-owned Saint Laurent, LVMH’s Loewe and The Row to cut ties.
Frasers declined to comment.
Separately, Prada on Wednesday announced a strong start to the year, increasing sales 16 per cent on a like for like basis to €1.19bn, beating expectations as sales of its Miu Miu brand jumped by about 90 per cent. So far this quarter Prada is second only to ultra high end Brunello Cucinelli in terms of revenue growth among luxury companies, analysts at Bernstein pointed out.
