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Speaker 1: Good morning everybody, and welcome to the Daily ODS. Is Thursday,

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Speaker 1: the second of June for those along the Eastern seaboard.

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Speaker 1: We are absolutely shivering through this start to winter, but

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Speaker 1: I hope everybody is having a good week. We've got

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Speaker 1: a lot to talk about today in the fast fashion space.

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Speaker 1: The collapse of a big global brand has raised some

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Speaker 1: questions about the industry. Plenty to come about that, But

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Speaker 1: first Zara or what is making news this morning.

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Speaker 2: Other than how freezing cold it is? Yesterday was a

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Speaker 2: big day in New South Wales with affirmative consent laws

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Speaker 2: coming into effect in the state. What this means, basically

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Speaker 2: is that consent must be actively sought and communicated through

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Speaker 2: words or actions. We have the New South Wales Attorney

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Speaker 2: General Mark's Speakment saying in a statement the consent reforms

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Speaker 2: are not just about holding perpetrators to account, but changing

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Speaker 2: social behavior with clearer rules of engagement to drive down

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Speaker 2: the rate of sexual assaults.

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Speaker 1: Tune into this story if you are looking to buy

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Speaker 1: your first home. Australia has recorded its first overall fall

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Speaker 1: in house prices for the first time since September twenty twenty,

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Speaker 1: according to property research company core Logic, Overall national house

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Speaker 1: prices fell by only zero point one percent in May,

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Speaker 1: but it is still going down. The decline was led

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Speaker 1: by Sydney, Melbourne and Canberra regional areas, and other capital

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Speaker 1: cities recorded an increase.

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Speaker 2: Shanghai, China's most populated city, has partially eased its harsh

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Speaker 2: lockdown after two full months. Some restrictions were relaxed at

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Speaker 2: midnight on Tuesday night, including on public transport and retail.

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Speaker 2: That all said, however, some restrictions do remain in place,

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Speaker 2: and China remains committed to its zero COVID policy.

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Speaker 1: And today's good news, Monarch butterflies have seen a resurgence

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Speaker 1: in Mexico after being at risk for years. According to

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Speaker 1: a new study from the World Wildlife Funder, the area

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Speaker 1: occupied by Eastern monarchs in Mexican forests grew thirty five

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Speaker 1: percent from December twenty twenty to the same month in

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Speaker 1: twenty twenty one. Zara, there is nothing like a butterfly

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Speaker 1: themed good news to bring in your Thursday morning.

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Speaker 2: Okay, So Sam, today we are talking fast fashion. That

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Speaker 2: is because fast fashion Giant Misguided is on the brink

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Speaker 2: of collapse. On Tuesday, the company went into administration suppliers

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Speaker 2: say they are owed millions of dollars. The company's website

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Speaker 2: has been taken down and it's believed many workers have

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Speaker 2: been let go. I guess a good starting point, sam

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Speaker 2: is how did Misguided get here? And what happens next

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Speaker 2: in a situation like this? Well, why don't we go

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Speaker 2: through what Misguided actually do? They're a UK based fashion company.

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Speaker 2: Most of their production facilities are still in the UK

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Speaker 2: and they are founded in two thousand and nine by

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Speaker 2: Nithan Passi. So like rival companies Boohoo and Shean, it's

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Speaker 2: best known for fast fashion, which basically means very cheap

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Speaker 2: clothing made very quickly on mass. Misguided have had their

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Speaker 2: controversies over the years. In twenty nineteen, it marketed a

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Speaker 2: one pound bikini that's about a dollar seventy six here

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Speaker 2: in Australia on sale in the UK that was said

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Speaker 2: to encourage this idea of wearing something once and throwing

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Speaker 2: it away. They also have faced a number of underpayment

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Speaker 2: scandals over the last few years, with calls that they're

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Speaker 2: paying their factory workers very little and well under the

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Speaker 2: legal limits. And they've been a big sponsor of Love Island,

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Speaker 2: which has also gotten them in a bit of trouble

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Speaker 2: from time to time. So a question that comes up

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Speaker 2: a lot with these fast fashion companies is how much

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Speaker 2: they're worth. And we don't have the exact figure for Misguided,

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Speaker 2: but we do know that they turn over hundreds of

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Speaker 2: millions of dollars worth of sales every year. But like

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Speaker 2: many of these fast fashion operators, they have operated at

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Speaker 2: a loss for several years. So they recorded a loss

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Speaker 2: of twenty six million pounds in twenty eighteen, and this

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Speaker 2: was put down to the facts that the company wasn't

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Speaker 2: clearing stock quickly enough, the idea that they were going

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Speaker 2: too fast for their consumer. But like many online retailers,

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Speaker 2: Misguida did pretty well during the pandemic because we all

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Speaker 2: shopped from home, we all spent our money online. This

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Speaker 2: all changed though, by the end of twenty twenty one,

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Speaker 2: when financial difficulties at the company really came to the

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Speaker 2: surface and there were reports around that the company was

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Speaker 2: seeking millions of dollars in emergency funding just to keep

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Speaker 2: their suppliers and their customers happy. These difficulties now are

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Speaker 2: really really at the forefront. Suppliers are complaining of outstanding

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Speaker 2: payments and now the company has gone into administration. For

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Speaker 2: anyone who is listening who isn't familiar with what administration means,

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Speaker 2: can you just take us through what it means and

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Speaker 2: what the implications are for when a company actually does

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Speaker 2: enter administration.

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Speaker 1: Well, I think the first thing to acknowledge if you

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Speaker 1: haven't heard of administration, congratulations, because it's not a very

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Speaker 1: good place for a company to be. It's a legal

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Speaker 1: status available to companies. They don't have to declare themselves

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Speaker 1: in administration if they can't pay the money that they

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Speaker 1: owe suppliers, investors, retailers, or customers. What happens when a

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Speaker 1: company enters a period of administration is that they appoint

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Speaker 1: a professional administrator, and this administrator essentially comes into the

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Speaker 1: role of almost a CEO type of figure, and they

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Speaker 1: then control all the assets. And there are companies that

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Speaker 1: are built to just come in in these situations and

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Speaker 1: be the voluntary administrators to sort out whether a company

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Speaker 1: needs to be fully folded or liquidated or if it

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Speaker 1: can be sold or revived. Importantly, what this means is

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Speaker 1: that owners relinquished control of the company and that in

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Speaker 1: turn protects them from legal action by anyone they owe

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Speaker 1: money to. So it's kind of if you're the visualizer,

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Speaker 1: that's the founders throwing their hands up in the air

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Speaker 1: and saying, we're not sure how to save this business.

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Speaker 1: We're going to hand it to the professional rescuers. If

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Speaker 1: they can't do it, we know that in good faith,

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Speaker 1: we really did try our best. So then it's up

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Speaker 1: to the ads and the administrator doesn't have to pay

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Speaker 1: back all the debt, but they can do whatever steps

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Speaker 1: they think are necessary to resolve the situation. They can

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Speaker 1: shut down various arms of the company, they can make

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Speaker 1: whole sections of the workforce redundant. And in this case,

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Speaker 1: the administrators plan to sell the business and its assets. Now.

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Speaker 1: The big problems are with selling the business is that

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Speaker 1: you need a buyer. So they're looking for a buyer now,

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Speaker 1: and the buyers that have been mentioned online. There's no

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Speaker 1: kind of firm leader in this race, but it seems

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Speaker 1: to be Boohoo, another fast fashioned giant Asos has been

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Speaker 1: mentioned in some of these dealings, but otherwise, you know

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Speaker 1: a smattering of other retailers around the world. But retailers

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Speaker 1: are pretty battered at the moment. There's a lot of

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Speaker 1: economic pressures and I'm not sure how many of them

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Speaker 1: are going to jump at the opportunity to buy a

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Speaker 1: brand with so much debt attached to it. One thing

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Speaker 1: to consider though, in that discussion about buying Misguided, is

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Speaker 1: that they could also just buy it and slap a

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Speaker 1: different name on it and relaunch it as a different brand,

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Speaker 1: or just make it part of their own brands, So

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Speaker 1: it can work in some cases. We'll have to wait

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Speaker 1: and see whether someone jumps into the bargain bin to

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Speaker 1: save Misguided from disappearing altogether.

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Speaker 2: Fast fashion is clearly a really really interesting topic and

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Speaker 2: something that's coming up more and more in the news.

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Speaker 2: What's next for the industry, For the fast fashion industry,

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Speaker 2: if you can call it that, well.

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Speaker 1: I think this goes to the question of what went

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Speaker 1: wrong for Misguided. I think customers and we see this

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Speaker 1: when we talk to the Daily Oz audience, they're moving

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Speaker 1: towards clothing brands that preference sustainability and ethics. We're seeing

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Speaker 1: a big shift in the way that we're using our

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Speaker 1: money to express our decisions about the climate and our

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Speaker 1: political views as well. The ethics of the business model

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Speaker 1: of fast fashion is concerning. A UK government report in

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Speaker 1: twenty eighteen wrote about excessive waste attached to Misguided and

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Speaker 1: shocking labor conditions in the fast fashion industry that come

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Speaker 1: from selling the products at such low prices. The committee

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Speaker 1: was shocked by how government orders were treated when they

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Speaker 1: visited Misguided's UK factories. They said in the report, if

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Speaker 1: this is how factory owners treat potential customers, we dread

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Speaker 1: to think of the conditions endured by their workers. That

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Speaker 1: is a pretty damning report. This report wasn't just about Misguided,

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Speaker 1: It was about sixteen retailers who had a range of

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Speaker 1: sustainability and labor ethics issues. Misguided was though, one of

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Speaker 1: the worst performers, and they only took action after the

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Speaker 1: report on three of the thirteen metrics. In terms of

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Speaker 1: the future of fast fashion, these growing concerns about sustainability

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Speaker 1: are putting big pressure on this industry. Actually, in March

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Speaker 1: this year, the European Commission announced a proposal to end

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Speaker 1: fast fashion altogether in the European Union by twenty thirty.

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Speaker 1: This proposal would introduce eco friendly design requirements for clothes

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Speaker 1: and measures to improve reuse, repair and recycling. And they

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Speaker 1: want to see the entire industry gone in the next

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Speaker 1: eight years. So if the European Union adopts that proposal.

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Speaker 1: It's fair to say the future of fast fashion and

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Speaker 1: Misguided is not particularly bright.

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Speaker 2: It'll definitely be interesting to see whether other fast fashion

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Speaker 2: brands end up following this same trajectory as Misguided. I mean,

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Speaker 2: she certainly seems to be going from strength to strength,

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Speaker 2: but at some point it does appear that consumers will

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Speaker 2: turn away from this fast fashion. Whether or not that

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Speaker 2: happens sooner rather than later remains to be seen, but

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Speaker 2: definitely something that we are keeping a keen eye on.

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Speaker 2: That is all we have time for today. However, thank

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Speaker 2: you so much for joining us on today's episode of

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Speaker 2: The Daily Odds. If you want to keep up to

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Speaker 2: date on what is happening throughout the day, follow us

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Speaker 2: on Instagram at the Daily Ods. It's wherever three hundred

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Speaker 2: and sixty thousand dollarsies get their news every day and

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Speaker 2: we would love to have you over there. Have a

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Speaker 2: brilliant Thursday