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1
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· Posted on
August 12, 2024

Mosaic Brands has announced a trading halt as its fashion brands have become frenemies

Mosaic Brands announced a trading halt so it could restructure and refinance the company.

What's the key learning?

  • Having multiple brands in the same industry kinda sounds like a strategy to help you dominate that market.
  • But, this strategy can backfire because essentially, it's like two discount department stores essentially competing for the same kind of customer.
  • So, Mosaic will need to do something pretty radical to keep itself…and all of its brands… afloat.

👉 Background: Mosaic Brands specialises in budget clothing brands like Noni B, Rivers, Katies, Millers and more. Before Covid, Mosaic had 4,000 staff and 700 stores across Australia. But in 2020 they suffered a $170 million loss as well as store closures and staff layoffs.

👉 What happened: Mosaic Brands announced a trading halt so it could restructure and refinance the company. Investors didn’t take to this news too well and its share price dropped over 43%...when it wasn’t in this trading halt.

👉 What else: Its financial fall was caused by a whole range of things:

  • a failed tech rollout
  • pullback in consumer spending
  • majority of its brands actually competing against each other

What's the key learning?

💡Market cannibalisation can be a huge issue for companies that own multiple brands targeting the same customer or audience.

💡Owning multiple brands in the same industry can mean that brands end up competing for the same customer, leading to unnecessary competition and higher costs for separate staff, advertising and logistics.

💡Wesfarmers faced the same problem with Kmart and Target back in the day. Wesfarmers realised that Target just couldn’t compete with Kmart and ended up dropping Target’s store numbers from almost 300 stores to just over 120.

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