Despite 'best efforts,' Mosaic to close 252 stores
Thousands of retail workers are set to lose their jobs following the collapse of Australian fashion group Mosaic, which announced that it will close all stores of its remaining chains, Millers and Noni B.
KPMG, the receivers for the group, confirmed that no buyer had been found for these brands, leading to the closures of 252 stores for the remaining chains.
This follows the closure of Mosaic's other chains, including Katies and Rivers, earlier this year, ABC News reported.
"Despite the best efforts of all parties, we have been unable to achieve a sale of any of the brands within the Mosaic portfolio," KPMG's David Hardy said as quoted by the news outlet.
The closures will impact an additional 933 employees, adding to the 650 job losses already reported from Rivers' closure this month.
Mosaic, which collapsed in October with a $249-million debt, employed over 2,500 workers across 651 stores in Australia and New Zealand. The closures will continue through April, as stores hold sales to clear remaining stock.
The company's collapse has also affected overseas suppliers, including garment factories in Bangladesh, which are reportedly owed $30 million, according to ABC News. These factories now face the risk of defaulting, putting thousands of workers' jobs in jeopardy.
FTI Consulting, which is overseeing the administration process, has not responded to questions about whether creditors, including employees owed unpaid entitlements, will receive any compensation.
"The voluntary administrators' focus is now on finalising their investigations and report to creditors," a statement from FTI said. The second creditors' meeting is expected in May.
Mosaic's collapse is part of a wider trend of Australian businesses struggling amidst rising costs. According to CreditorWatch, the country has seen a 40% increase in insolvencies compared to pre-pandemic levels, news.com.au reported.
In fact, Australian businesses are failing at their highest rate since October 2020, with the latest business risk index showing a failure rate of 5.04%.
The retail sector, along with other industries such as food and beverage and administrative services, has been hard-hit.
Retail businesses, like Mosaic, are facing mounting pressures from cautious consumer spending and broader economic strains, including rising interest rates.
"Together with some greater caution in discretionary spending and softness in interest rate sensitive sectors of the economy, this unsurprisingly has led to higher voluntary business closures and some rise in insolvencies," said Ivan Colhoun, chief economist at CreditorWatch, as quoted by news.com.au.
The rise in voluntary business closures may also signal a potential increase in layoffs across Australia, as companies scale back operations in response to financial pressures.
As of November 2024, Indeed found that around 1.4% of Australia's labour force were laid off or made redundant.
Source: Indeed
This is a gradual increase from the one per cent reported in 2022, but is well below the 1.8% layoff rate that emerged prior to the pandemic.
"It's another measure that highlights both the strength and resiliency of Australia's job market," Indeed said in its report. "In an economic downturn, which Australia is currently experiencing, we'd typically expect to see a spike in layoffs across major employers, but that hasn't yet eventuated."
