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Fashion brand Lisa Ho collapses

Delta Goodrem may have to find another designer for her controversial pant suit, after fashion designer Lisa Ho collapsed into administration late last week.

The company joins a growing list of Australian fashion retailers to go under, as they struggle under tough trading conditions. Since the global financial crisis, Colorado, Brown Sugar, Bettina Liano, Ojay and the Shoe Superstore have all buckled.

Local retailers are not just competing with online stores, but a host of international fashion chains have recently setup shop in Australia, including TopShop and Zara.

Less than a month ago, Lisa Ho Designs was contemplating a public listing on the National Stock Exchange, which was then abandoned in favour of pursuing a private equity deal. The company operated 10 flagship retail stores, an online shop and outlets with David Jones (ASX: DJS) department stores.

“However, premium fashion is facing pressures from online sales, the way fashion retailing is changing to meet market expectations as well as demands for cost reductions,” the company warned. Accounts show Lisa Ho Designs recorded a $2.4 million loss last financial year, which were blamed on strategic errors, causing it to produce too many garments during spring/summer and not enough during the following winter/autumn season.

Administration doesn’t necessarily mean the end for the 30-year fashion house. Administrator HLB Mann Judd says it will go through the company’s assets and look for a buyer, but in the meantime, all stores will continue to trade.

The most likely buyers would be David Jones, Myer Holdings (ASX: MYR) or even Solomon Lew’s Premier Investments (ASX: PMV). All three are looking to expand their in-house brands, and reduce their reliance on offshore designers.

Foolish takeaway

Following the reincarnation of several Australian fashion brands including Charlie Brown, sass and bide, Bettina Liano and Tsubi; Lisa Ho Designs has a good chance of being re-birthed. But it’s most likely to be part of a larger stable of brands, rather than a stand-alone retailer.

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