For years, Norway’s upbeat and expansive clothing retailer “Moods of Norway” has billed itself as making “happy clothes for happy people,” and been known for its admittedly silly pink tractor logos and waffles. The good times have suddenly stopped rolling, however, with losses forcing the company to lay off workers and close its flagship store in New York.
“This is a terribly sad day!” one of the clothing chain’s founders, Simen Staalnacke, exclaimed to newspaper Dagens Næringsliv (DN), while finally sitting down for an unusually serious conservation at an Oslo café on Thursday. “We’re not used to reporting bad news to our employees.”
Staalnacke had earlier spent the week trying to put a happy face on news last weekend that Moods of Norway was logging losses for the first time in its history. Newspaper Finansavisen reported that results had been declining in recent years and that losses loomed in 2014. Layoffs and store closings seemed inevitable, reported Finansavisen.
Staalnacke, however, had told DN on Tuesday that Finansavisen’s report was “exaggerated” and that Moods of Norway was in fact considering expansion into new markets including China. He claimed Moods of Norway was “developing a new strategy” but wasn’t ready to talk about it. “Even though we are considering closing a few stores, we’re opening a new store in Hamar this week,” Staalnacke said.
CEO exit, expansion on ice
Now the mood has changed. Staalnacke told Moods’ 431 employees on Thursday that 20 jobs within design, production, logistics and marketing will be cut. The company must slash costs by as much as NOK 40 million (nearly USD 6 million) and will close the store it opened amidst much hype in New York just two years ago.
The high-profile American fashion executive who was brought in to be Moods’ new boss earlier this year, George Santacroce, will also leave his position as chief executive after just four months on the job. Santacroce, who played a key role in the success of the Tommy Hilfiger brand, was hired to turn Moods of Norway into a global fashion brand, but Staalnacke’s co-founder Jan Egil Flo told DN that “times have changed. We simply don’t have the money to finance a major foreign expansion right now.”
Flo will take over the duties of Santacroce, who had replaced Nils Are Karstad Lysø when he left last spring to run the Norwegian Opera and Ballet. Flo earlier has worked as the company’s finance director and retail director.
‘Need greater flexibility’
Asked what went wrong for the company founded in the unlikely mountain town of Stryn in 2003, Flo said the organization “has become too big and costly. We need to secure ourselves greater flexibility to maneuver in line with the overall fashion market. At a time when trends are copied just seconds after they’ve left the catwalk, we can’t be left dragging along.”
Flo cautioned that it’s easy to examine the situation in hindsight, and stressed that Moods “has had fantastic results for many years. The company has generated solid profits. But when we decided to open in New York, we probably should have leased 100-square-meters instead of 400 square meters.” Moods of Norway reported revenues of NOK 343.9 million last year and a profit of NOK 19.4 million, down from the year before. Revenues this year are expected to land at NOK 325 million with a probable loss.
Flo said the company will now “concentrate on running its owns stores in the future.” Moods of Norway clothing can now be found in around 500 stores in Norway, and distribution will be scaled back to its own locations, numbering around 100 in Norway, Sweden, Russia, Germany and Greece. Its store in Los Angeles is expected to remain open. The company will also invest more in online sales.