James Thomson Editor

James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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How retailer Brown Sugar collapsed for the second time – a month after its relaunch

Published 03 April 2013 09:04, Updated 12 April 2013 08:48

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How retailer Brown Sugar collapsed for the second time – a month after its relaunch

Not sold in a market down in New Orleans ... nor, apparently, in South Yarra. Brown Sugar’s Chapel Street store could be in the firing line as the brand plans cutbacks as part of its second attempt at to bounce back from administration in 18 months. Photo: Vince Caligiuri

If you want proof that a month is a long time in business, then look no further than women’s fashion retailer Brown Sugar.

In early March, the director of Brown Sugar’s parent company Brand Directions, Winfred Fan, was hosting at dinner for fashion writers at Melbourne restaurant Rosetta, run by celebrity chef Neil Perry (you can see all the pictures from the night on this special Facebook page).

It was an important event for Fan. Not only was he launching Brown Sugar’s autumn/winter collection, he was officially relaunching a brand that he freely admitted had become “very daggy” before it collapsed into administration in August 2012.

Brand Direction was formed in October 2011 to buy Brown Sugar, with fashion executive David Mullen installed as managing director. He reduced the store network from 40 to 16 and cut staff numbers but he resigned in May 2012 after a disagreement with the board about growth plans and Fan was installed as MD.

Fashion writer Janice Breen Burns’s report on the event describes how Fan and his team showed off a collection apparently inspired by the Baroque period – who knew that the 1500s could be so relevant today?

But as the longtime fashion journo wrote, this was Brown Sugar’s big comeback attempt.

“Now it’s up to its former market of 40-plus ladies to recognise that and return to embrace it with disillusions dissolved. Whether or not they do is in the lap of the proverbial fashion goddesses. Mr Fan’s work is done.

“Now, fingers crossed. Perhaps a new market of 30-plus urban classicists will also discover it. Fingers, eyes and legs crossed for that happy thought.”

All that crossing apparently hasn’t worked. Eighteen months after rescuing Brown Sugar from administration, Brand Directions itself has been placed in administration.

Fan is now planning further store closures and job cuts, although the chain continues to trade.

It’s a sad story, but a good lesson.

Rescuing a company from administration can often mean you get a great brand at a bargain price. But you can’t pay the bills with a brand alone, no matter how much equity it has.

Resurrecting Brown Sugar a second time will be an enormous task.

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