They were once jumping for joy and declaring how they made “happy clothes for happy people.” Now the mood has changed dramatically among those working for Moods of Norway, the offbeat Norwegian clothing retailer, after its founders declared bankruptcy on Wednesday.
“It’s incomprehensibly sad that the adventure is now over,” Moods of Norway founder Simen Staalnacke told Norwegian Broadcasting (NRK) after he announced the bankruptcy filing to employees. “We have really tried to make this work. I feel like words aren’t enough in such an extreme situation.”
The company sent a message to the Oslo Stock Exchange just after 3pm on Wednesday, acknowledging that the company has been unprofitable for the past few years. Pre-tax losses amounted to NOK 30 million last year and accounts through August continued to show “a negative development,” the company stated.
Bank pulled the plug
Earlier this week its lead bank, Sparebanken Sogn og Fjordane, halted further credit for Moods of Norway, and efforts to raise new capital have not succeeded during the time frame company officials were given, according to the company’s statement. Investment last year by the larger Norwegian clothing retail chain Varner, which bought 25 percent of the company, didn’t help either. Moods of Norway’s chairman Jan Egil Flo said the company’s board “unfortunately saw no other way out” this week than to file for bankruptcy.
Moods of Norway blamed the lack of profitability on efforts to expand overseas (stores opened but later in closed in the US, for example) and currency exchange challenges. “The clothing industry is a tough branch, with hard competition and pressure on margins,” the company stated. “The company has worked to cut costs and make operations more efficient, and to develop the brand. This has unfortunately not had the desired effects.”
Stores still open, for now
Staalnacke, who enjoyed posing in Moods of Norway’s colorful and quirky clothes, described the company as “a fantastic Norwegian entrepreneurial adventure for 11 of the 14 years the company existed. We want to thank everyone who has been along for the ride. We wished with all our hearts that this fairy tale would have a happy ending.”
Around 100 people work at Moods of Norway’s offices in the mountain town of Stryn and in Oslo, and at the chain’s 18 stores in Norway. Their fate will now be up to the bankruptcy administrator and most if not all may lose their jobs. The company reportedly has accumulated debt of more than NOK 112 million (USD 14.5 million).
The bankruptcy applies to Moods of Norway operations in Norway. Affiliated companies Brandstad, Moods Sverige and Moods USA would not immediately be affected by the filing.