The luxury fashion platform industry is experiencing a turbulent phase following the collapse of notable firms, raising concerns about financial sustainability and industry consolidation.
The landscape of luxury fashion platforms is undergoing a significant transformation amidst a liquidity crisis that has seen notable firms like Balang enter corporate rehabilitation proceedings. As reported by E Today on the 14th, both Brandi and Ribbons, two prominent players in the fashion platform market, are now classified as having experienced complete capital erosion, raising concerns about their financial viability.
In an assessment by the Financial Supervisory Service, Brandi’s operating company, Newnex, was reported to have a total capital of -30.6 billion won at the end of last year, while Ribbons reported a negative capital of -1.28 billion won. Such negative capital figures suggest deep financial instability, with external auditors questioning the two companies’ ability to sustain ongoing operations effectively.
The crisis began with the closure of Balang’s ‘Balang Connected Store’ located in the Yeouido IFC Mall, highlighting the precarious situation facing fashion platforms. As liquidity concerns spread through the industry, firms are compelled to reassure stakeholders about their financial health and prioritize gaining additional investments. The industry is currently focusing on ensuring capital strength, which has become increasingly vital for success in the competitive fashion platform market.
In response to Balang’s predicament, luxury platform Mustit has swiftly sought strategic investments, engaging Samjong KPMG as the lead manager for its Series C investment round. The company aims to solidify long-term growth through meaningful equity investments while also striving to enhance its profit margins. Mustit’s CEO Jo Yong-min stated, “Rather than expanding our scale immediately, we prioritized operational efficiency and the transparency of our financial structure,” and he underscored that preparations are underway for a new growth cycle anticipated after 2026.
Meanwhile, Trenbi, another luxury platform, successfully attracted Series E funding last June. However, the approximately 6 billion won raised exclusively involved existing shareholders, indicating the challenges in accessing broader investment. With no immediate plans to pursue further funding, Trenbi is concentrating on restructuring its operations to achieve profitability. A company spokesperson announced that they had recorded their first profit of 20 million won in March and expected to reach an operating profit by April.
The atmosphere among industry insiders reflects concerns regarding the future growth potential of fashion platforms due to the liquidity challenges faced by Balang and Brandi, the latter previously hailed as a potential “next unicorn.” There is speculation that the landscape may shift towards consolidation around larger firms, an occurrence that echoes trends seen in the e-commerce sector. The developments suggest a pivotal moment for the fashion platform industry, as stakeholders navigate through the financial turmoil and seek pathways to recovery and sustainability.
Source: Noah Wire Services
