Brosa collapse: Online furniture retailer enters administration
A “stylish” online furniture retailer has entered administration, with experts blaming the shock collapse on the brutal Covid pandemic.
On Wednesday morning, it was announced that Brosa – a popular online furniture and home decor retailer – had appointed Richard Tucker and Michael Korda of KordaMentha as voluntary administrators.
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KordaMentha Restructuring is now commencing the sale process for Brosa, with an announcement explaining the digital retailer of luxury furniture grew rapidly during Covid-19 as the pandemic directed many shoppers online for direct-to-customer deliveries.
“The business faced challenges when sales declined after the Covid-19 restrictions were lifted,” Mr Tucker said.
“This caused short-term cashflow pressures after a period of phenomenal growth.
“KordaMentha is seeking urgent expressions of interest in the sale of Brosa as a going concern.”
Mr Tucker noted the business “tripled in size during the pandemic, developing a strong customer base and technological capabilities that would be an asset to many other furniture retailers”.
“I expect that there will be strong interest in the Brosa business,” he said.
“The company was embarking on a campaign to reduce its inventory holdings and refocus itself as a make-to-order business. We plan to continue this process to clear stock.
“If you are looking for a new couch, or other stylish furniture in the lead up to Christmas, visit the Brosa website...for a great deal.”
According to the Brosa website, the company was “born out of discontent with the status quo, and a desire to change the furniture industry for the better”, with the founders disagreeing that premium furniture had to come with a premium price tag, given “that price is often inflated with mark-ups to accommodate other costs, like importers and wholesalers”.
As a result, Brosa “removed importers, wholesalers and high-end stores from the equation, opting for a completely in-house team that manages the Brosa brand”.
The Melbourne-based start-up was launched by CEO Ivan Lim along with co-founders David Wei and Richard Li in 2014.
In 2017, the company made headlines after raising $5 million in Series B funding, with Mr Lim talking up plans to disrupt the $13 billion furniture industry.
The are now more than 60 employees working for the firm, with news of the collapse leaving them facing an uncertain future just days from Christmas.
The news comes as the City of Sydney’s recent annual business needs survey revealed that more than 75 per cent of the city’s retailers were operating below pre-pandemic levels, with more than half claiming they were worse off in 2022 than in 2021.
“Retail businesses have generally requested support in the form of business grants, precinct marketing and promotion, and greater communication and support from the city and other levels of government,” the report reads.
Meanwhile, earlier this month, an economic update from CreditorWatch’s chief economist Anneke Thompson revealed the first hint that rising interest rates were starting to impact the economy was the release of retail trade figures in early December which showed a 0.2 per cent month-on-month decline.
The report noted that even on a monthly trend, retail trade growth had “moderated significantly from the highs of almost 20 per cent recorded in August 2022”.
Trade fell in all major categories except for food retailing, which grew by 0.4 per cent, and the biggest drop was recorded in department stores, at 2.4 per cent.
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