Ralph & Russo nears administration after COVID hammers A-list designer’s sales

·3-min read

The British couture fashion brand which designed the Duchess of Sussex's £56,000 engagement dress is on the brink of administration following a pandemic-induced sales slump.

Sky News has learnt that Ralph & Russo could fall into the hands of insolvency practitioners as early as this week, according to people close to the company.

Begbies Traynor and Quantuma, the professional services firm, are understood to have been put on standby to act as joint administrators to oversee an insolvency process.

It was unclear whether a pre-pack sale - where a buyer is lined up to take on a company's assets immediately after it enters administration - was on the cards.

The precise circumstances surrounding the potential appointment of administrators were also unclear, while a rescue deal to avert its collapse also remains possible.

Last week, a Ralph & Russo spokesman told Sky News that the company would fight any attempt by creditors to force it into insolvency.

The appointment of administrators - which sources insisted was not yet certain to take place - would cap a remarkable fall for one of the most talked-about names in the British fashion industry.

Ralph & Russo counts some of Britain's wealthiest people among its investors, including Candy Ventures Sarl - the investment vehicle of Nick Candy, the property developer.

Indications of the financial strains facing the business have emerged in recent months, including its failure to make a number of salary payments and staff pension contributions.

Founded in 2010 by creative director Tamara Ralph and her then-boyfriend, Michael Russo, the business has drawn tens of millions of pounds in funding from the likes of Candy Ventures and John Caudwell, the billionaire founder of the Phones 4U retail chain.

Tennor Holding, the owner of the La Perla lingerie brand and investment vehicle of financier Lars Windhorst, invested roughly £40m in return for a minority stake in Ralph & Russo in 2019.

That transaction is said to have valued Ralph & Russo at approximately £175m.

The fashion house, which specializes in haute couture and ready-to-wear clothing and luxury goods, has notched a number of notable achievements during its brief history.

In 2014, it was the first British designer in nearly a century to be accredited by the French body which decides which fashion labels can officially be designated haute couture.

It sprang to global prominence in 2017 when the Duchess of Sussex - then Meghan Markle - wore one of the designer's dresses in her engagement photographs.

Ralph & Russo's celebrity afficionados are also reported to include Beyonce, Angelina Jolie and Gwyneth Paltrow.

Its average client spends £50,000 per transaction, while it has opened boutiques in Doha, Dubai and Monaco.

The company also operates from plush locations in London's Mayfair and New York's Fifth Avenue, befitting its internationally renowned designs.

However, it has now run into choppy legal and financial waters, partly as a result of the pandemic's impact on its fortunes.

The dearth of red carpet events - one of the mainstays of the haute couture industry - has dampened demand for Ralph & Russo's dresses.

The company recently deferred some staff payments, while The Sunday Times this month quoted a source saying that bailiffs had been called to its Mayfair headquarters on several occasions.

Roughly 100 people work for Ralph & Russo, the majority of whom have been placed on furlough for much of the last year.

Mr Candy, who lent the company £17m in 2018, brought legal action against it last year after Mr Russo took out a director's loan worth several million pounds.

Further litigation has followed amid conflicting accounts of whether that loan has been repaid.

An administration process is likely to attract interest from global fashion and luxury goods houses, as well as high net worth individuals, according to retail analysts.

A source close to Ralph & Russo said just days ago that trade was "beginning to revive" and that demand for the brand was "strong".

A spokesman for Ralph & Russo did not respond to a number of calls and text messages on Wednesday.

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