Topshop New Zealand has been tipped into receivership in the face of mounting competition.
Top Retail Ltd, the company that operates the license for the British brand in New Zealand, said its Auckland and Wellington stores had been placed in receivership but would operate as usual until a decision was made on the future ownership of the company.
The directors said they were committed to working closely with staff through the transition stage.
"We have put our hearts and souls into this business, we have the best staff, great store locations, and the directors have left no stone unturned in trying to find a solution," they said.
"It is with regret that the directors had no alternative but to request the secured lender to appoint receivers. We will work closely with the receivers to ensure the best possible outcome for the business and employees."
McGrathNicol's Conor McElhinney and Kare Johnstone were today appointed receivers by the Auckland-based company's secured lender at the request of directors, the receivers said.
Directors Mary Devine, Gary Hitchcock, Karen Walker and James Whiting ran the rule over the business' ability to keep trading in an environment of heightened competition after the Australian Topshop operation was placed into voluntary administration over similar issues.
"It became apparent that the company was unable to continue to trade due to the losses being incurred and the directors therefore requested the secured lender appoint receivers to the company," the receivers said.
Questions were put to the New Zealand division of Topshop in May when Topshop Australia was placed in receivership.
At the time a spokesperson for the company reassured consumers that the New Zealand business was not in trouble and was continuing to build its market.
"The franchise for Topshop Topman NZ is an entirely separate entity and shareholding from the Australian business, so their situation doesn't have any affect on our business operations," the spokesperson said.
"Unlike the Australian business that has a couple of dozen large-format stores in a highly competitive market, Our strategy and approach to rolling out the brand in the NZ market has been a much slower, considered rollout with only two stores in key locations."
The plan to bring the British retail brand to New Zealand had been in talks for three years before it opened, with Kiwi designer Karen Walker and her husband Mikhail Gherman partnering with Barker's managing director Jamie Whiting and rich-lister Philip Carter to form Top Retail in 2014.
The company secured the rights to own, develop and operate the brand across New Zealand.
A spokesperson for Karen Walker said the Karen Walker group was a completely different entity to Top Retail and was unaffected.
"The investment in Top Retail was an independent and private investment by Karen, as a shareholder," she said.
First Retail managing director Chris Wilkinson said it was "sad but not surprising", given the product coming into Australasia had not been performing well elsewhere.
"You could not have picked more experienced partners in Karen Walker, Barker's and Carter Group, but even with their knowledge and drive the simple fact is that consumers in the target demographics failed to embrace the products," he said.
"The stores had short honeymoons with consumers, but failed to achieve the momentum required to sustain the large sites and infrastructure required to keep these profitable.
"We know the brand is successful, but Australasia was being sent product that was left from the previous European season - in many cases lines that didn't work there.
"In all likelihood that would have been beyond the control of the owners, so they were put in a very difficult position."
So far Top Retail has opened a store on Auckland's Queen St and one on Wellington's Lambton Quay, and had signalled plans to add two more, one of which was rumoured to be in Christchurch.
It had also planned to open an online store this year.
The retailer is known for its "fast fashion" - affordable collections based on the latest catwalk trends - and collaborations with international designers.
The receivership is the latest in a line of retailers struggling to make a traditional bricks-and-mortar model work when online rivals avoid the overhead of a high street site and are accused of skirting Customs duties that traditional vendors face.
- with BusinessDesk>