Source : BOF (Fashion Retailer Scotch & Soda Seeks Bankruptcy for Dutch Operations)
Scotch & Soda is a global brand that pays attention to well-dressed people of all ages. Laurent Hompes founded the company in 1985. In the newest instalment of Scotch & Soda’s brand campaign ‘From Amsterdam, From Everywhere’, the Dutch fashion label honor all free-thinking wanderers who are drawn to explore, and that includes everyone. Treasures discovered on global adventures are poured into collections and signature looks that clash eras, classics, and places of inspiration, meshing unexpected fabrics and patterns back at their canal-side design offices. Scotch & Soda is popular among adolescents, millennials, and people over the age of 50. So the idea behind the brand really was to present
Amsterdam’s fashion. Collections are currently available in 235 freestanding stores throughout Europe, North America, Asia, the Middle East, Africa, and Australia, as well as 7.000 doors in some of the world's most populous cities, including New York, London, and Paris. Over 70 countries are served by the brand's online operations.
Scotch & Soda, a Dutch fashion retailer, declared bankruptcy on March 20 after filing for bankruptcy for its Dutch operations. Scotch & Soda revealed in a statement that it is the result of "severe cash flow problems" caused by the lockdown imposed during the Covid-19 restrictions in The Netherlands, as well as the energy crisis, high inflation, and reduced consumer spending that followed.
The company, founded in Amsterdam in 1985, has 32 stores in the Netherlands, which will remain open pending a possible restart. Scotch & Soda returns to profitability in 2018 after three consecutive years of losses. That year, the Amsterdam-based fashion label earned 915,000 euros in net profit and 339 million euros in revenue. However, Scotch & Soda's sales fall again in 2019. Sales fell 3% to 328.7 million euros. Despite record sales of €342 million in the fiscal year 2021/22, 'a structural cash flow deficit has resulted in the company's failure to absorb the negative effects of corona and high inflation,' according to the company.
"Scotch & Soda has grown particularly rapidly in recent years, just before the Covid-19 pandemic began," according to a Dutch business newspaper. As a result of lockdown restrictions, the brand has already closed numerous locations, and massive investment has proven futile in attracting customers back to its stores. According to curator Jasper Berkenbosch of the Financieele Dagblad, the company may have overinvested in its foreign expansion. 'Flagship stores were opened all over the world with great success because sales increased,' he explained. 'However, the current fiscal year, which runs until April, shows a loss.' Scotch & Soda employs 2000 people worldwide, including 800 in the Netherlands. The company's headquarters and design studio are located in Amsterdam.
Despite the brand saying it has seen record sales, macroeconomic and geopolitical pressures weighed on Scotch & Soda. "This decision to file for bankruptcy became unavoidable following a chain of events that accelerated severe cash flow issues," Scotch & Soda said in a statement. Although Scotch & Soda outcompeted the market in FY 21/22, with record revenues of €342.5m (£300.2m), the Covid crisis had a negative impact on its business performance and financial health for two years," the brand said in its statement. The last lockdown in the Netherland over the holiday period of December 2021 and January 2022 were “particularly damaging,” causing a direct loss of 20 million euros, it said. "This was followed by a significant drop in consumer confidence as a result of the Ukraine war, the resulting energy crisis, and the subsequent high inflation rates. This contributed to the company's severe cash flow issues, which it has been dealing with since June of last year and have necessitated ongoing assistance from its lenders and shareholders." the brand said in its statement.
Source : DutchNews.nl
Scotch & Soda stated that it has been struggling since last June, and that private equity investor Sun European Partners, which acquired a stake in the label in 2011, is no longer willing to provide additional funding. Following months of searching for additional funding, the company hired consultants Teneo earlier this year to find a buyer. "Unfortunately, the company's current shareholder and lenders were unable to assist it any further, and time was running out to complete the sale of the company as a financially solvent entity to a new shareholder," the company said. The board is deeply disappointed that this situation has arisen. It will assist the bankruptcy trustee in his efforts to set up a successful sale process in order to preserve the Scotch & Soda brand in the Netherlands and, where possible, protect the jobs of its employees.
2020
As the Corona virus upturns the entire world in early March 2020, declining sales in 2019 marked the beginning of the misery. Scotch & Soda applied for a multimillion-dollar loan that year to help the company weather the health-care crisis. Sun Capital, the fashion brand's US owner, lends the company 15 million euros, while a consortium of Dutch banks lends the same amount. Scotch & Soda's chief finance officer, Thomas Bervoets, reports that the brand has taken a hit. "In March, our top priority was to keep cash in the business," he explained. With the exception of those in Sweden, almost all branches in the fashion brand's portfolio closed in mid-March due to lockdowns. As a result, sales dropped by 12%.
2021 - October
Scotch & Soda announced new expansion plans in October, including plans to open 15 new stores and seven shop-in-shops around the world. The stores will be in major cities such as Paris, Madrid, Mumbai, Bucharest, Perth, and Riyadh. To help with the expansion, the company established a new distribution center in Hoofddorp, near Amsterdam. The center is 27.5 thousand square meters in size and includes solar panels and vertical gardens.
Sun Capital, Scotch & Soda's owner, invested an additional 15 million euros in the company to support its growth. Furthermore, Sun Capital converted a shareholder loan worth 200 million euros into shares to provide financial assistance to the fashion brand during the Corona crisis. Scotch & Soda anticipates a 4% drop in sales in fiscal year 2021. In comparison to many other brands, the sales decline is minor. The company attributes this to strong results from its online store, which saw an 18% increase in sales.
2022 - November
Scotch & Soda's expansion is paying off in November 2022. Indeed, the fashion label is experiencing double-digit sales growth. This increase raises its sales above pre-pandemic levels. It made 328.7 million euros in sales in 2019. It can record a revenue of 342.5 million euros in November 2022.
2023
After a considerable amount of expansion, made possible in part by parent company Sun Capital's multimillion-dollar investment, news emerged in March that Sun Capital is considering selling Scotch & Soda.
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