Mahabis files for administration, former start-up star is latest retail casualty

By

Sandra Halliday

Published
Jan 2, 2019

Upscale slipper brand Mahabis has gone into administration despite what had seemed to be a strong business and an appealing USP that had made it a popular pick for affluent Millennial shoppers.

The four-year-old online-only company, whose products sold at premium prices, called in administrators from KRE Corporate Recovery last week and said it has ceased trading “for the moment” with its website now closed.

But the “for the moment” comment suggests that its owner might try to relaunch the brand.

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The company’s footwear retailed at £70 and came with brightly coloured, interchangeable rubber soles that took them from being comfortable indoor slippers to practical outdoor shoes.

It was a concept that appeared to have plenty of fans with the firm saying it has sold almost one million pairs globally in the past few years. And analysts had only recently been valuing the firm at around £100 million. This makes it just the latest in a succession of disruptive start-ups to move from hero status to zero in a relatively short time as commercial realities won out over the hype.

As well as offering a unique product, the company had appeared to be the poster child for forward-looking fashion-related businesses with founder Ankur Shah, who had built up and sold a tech-based ad firm before launching it in 2014, offering staff a progressive workplace. His approach included family-friendly policies such as allowing employees to work from home one day a week.

The company had embraced the digital world and marketed itself actively through social media, a strategy that is often a recipe for success in modern retail. 

Shah had even suggested in an interview a couple of months ago that the company would be able to survive despite the tough retail conditions, telling The Times that he wanted to create “the Nike of downtime” and that “as long as we carry on making stuff for customers that they want, we won’t have a problem.” 

While Mahabis may have stood out from the crowd in terms of its concept and approach, it’s clear that Shah’s confidence was misplaced and he has faced the same tough environment that has hurt the rest of the fashion sector of late.

The company is now also dealing with many of the issues that more traditional firms have had to handle. These include explaining to customers who bought the products for the Christmas season that they’re unlikely to get refunds if they return the slippers, and also handling unhappy creditors.

In the firm’s most recent accounts (for the year to June 2017) it showed debts of £2.6 million, a larger debt load than the £0.72 million it owed a year before. It’s unclear whether that debt has grown or shrunk in the intervening 18 months.