Fashion enthusiasts were left shocked when the Australian franchise of major fashion label Dion Lee entered administration on Thursday.
It’s understood the much-loved brand, worn by mega-stars like Taylor Swift and Dua Lipa, collapsed after a partnership deal with Cue Clothing Co fell through.
And industry insiders have now revealed the signs that Dion Lee was heading for disaster.
Speaking to News Corp on Sunday, one source claimed Lee had ‘forgotten his roots’ in recent years by opening too many retail stores.
‘Unless you are a Zimmerman, opening too many stores is a recipe for disaster. His backers likely got sick of him not focusing on profits,’ they claimed.
Another insider pointed to Lee’s botched plans for opening a retail storer inside a sprawling loft space with five-metre-high ceilings and original columns in New York’s SoHo district.
He had planned to open the retail store after staging his Fall/Winter 2001-2002 collection at the same venue, but his plans never eventuated.
‘It never opened. It is a heritage building, a 4000 square feet space and a lot of the building wasn’t to code. He couldn’t open the store until they sank a lot of money into it,’ the source said, noting that the project put huge financial pressure on Lee.
The insider also speculated that Lee’s disagreements with his powerful backer Cue Clothing Co may have added to the brand’s downfall.
Cue became a partner with Dion Lee in 2013 and the company was also a shareholder in the business.
However Cue reportedly ended its partnership agreement with Dion Lee and also cancelled their investment in the business, according to The Australian.
The withdrawal of Cue’s investment is thought to have exacerbated the downfall of the Dion Lee brand.
Announcing the relationship breakdown, a Cue spokesperson said: ‘After a recent strategic review, a decision has been made by the Cue Group to focus on our local Cue and Veronika Maine operations’.
Antony Resnick, a liquidator from insolvency firm dVT Group, has been appointed as the administrator for Australian Dion Lee.
dVT Group is also in the process of considering investors for the company to strengthen their current financial position.
The business is understood to continue to trade until the company is restructured
Dion Lee found renewed fame after pop star Taylor Swift wore a $650 Dion Lee Crochet Corset Top at the Super Bowl as she cheered on her boyfriend Travis Kelce.
The clothing label was founded by Australian fashion designer Dion Lee in 2009.
Since then the company has grown exponentially, with six outlets in Australia and 160 stores worldwide, including a store in the US which opened in December last year.
Mr Lee, 38, has also collaborated with Kanye West on a shoe collection and designed clothing worn by pop star Dua Lipa.
Some of the accessories designed by Dion Lee retail for as much as $A990.
Mr Resnick said it is too early to assess the assets and the liabilities of the company.
The Dion Lee brand has built global recognition and credibility in the world of high fashion,’ Mr Resnick said in a statement to news.com.au.
‘It is regularly worn by cultural icons and influencers. It is noted in the industry for its unique designs. All of which should attract both local and international investor interest.’13445139
A Mr Resnick also said that a creditors report, which outlines the amount of money owed to the suppliers of a business, is being prepared and a meeting is yet to be held with suppliers to discuss outstanding payments.
Only the operations of the Australian stores are understood to have been affected and customers are still able to access the online website of the company.
The financial position of the Dion Lee store is also reportedly being evaluated.
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