Dutch fashion brand Scotch & Soda announced on Monday that it had filed for bankruptcy for its Dutch business. The reason is “serious cash flow problems” caused by lockdowns during the Corona crisis and the subsequent energy crisis and high inflation.
But what else preceded bankruptcy? FashionUnited lists all the developments that have made life difficult for the Amsterdam-based clothing brand in recent years.
The fashion brand Scotch & Soda was founded in 1985 by 24-year-old Laurent Hompes. He launched a men’s collection and became known for innovative jacket designs: sporty hooded jackets in bright colors that were affordable. In 2001, the then management under Joep Krouwels, Erik Bijlsma and Patrick Munsters brought the fashion brand back onto the market, after which the men’s label was expanded in 2008 to include the boys’ line “Scotch Shrunk”. A women’s collection followed in 2009: Maison Scotch, and in 2011 a daughter was added: Scotch R’Belle. Scotch & Soda opened its first stores in 2008 and then went on to conquer the whole world. Today, the fashion brand has more than two hundred stores worldwide and is represented in 7,000 international department stores. The web shop is also active in over seventy countries.
After years of losses, 2018 was the first fiscal year in which the company returned to a surplus. The Amsterdam-based fashion brand posted a net profit of 915,000 euros and sales of 339 million euros. But in the 2019 financial year, Scotch & Soda once again had to accept a decline in sales. With a minus of three percent, sales level off at 328.7 million euros.
2020
The drop in sales in 2019 is the beginning of the misery, because at the beginning of March 2020 the corona virus conquered the whole world. This year, Scotch & Soda is applying for a multi-million euro loan to deal with the aftermath of the coronavirus pandemic. The US owner of the fashion brand, Sun Capital, is lending the company 15 million euros and a consortium of Dutch banks is providing the fashion brand with the same amount. According to CFO Thomas Bervoets, the Scotch & Soda brand is severely affected. “Our first priority in March was to keep liquidity in the company,” he said. Almost all stores in the fashion brand’s portfolio were closed due to lockdowns in mid-March, with the exception of the stores in Sweden. As a result, sales fell by 12 percent and the company made a loss of 159.6 million euros.
March 2021
After heavy losses, Scotch & Soda seems to be turning the tide and introducing a new brand identity. “Amsterdam Couture” becomes “The free spirit of Amsterdam”, an ode to the free spirit of the Dutch capital. In addition to a new brand identity, the logo will also be revised. The fashion brand’s online channels are getting a refresh, as are several stores. The company also plans to open 15 international stores and 12 shop-in-shops. By March 2021, the number of stores will increase to 225 and shop-in-shops to 161.
As the first part of the expansion, the company will open a store in Utrecht and a boutique in the Westfield Mall of the Netherlands. This will be followed by the opening of the fashion brand’s largest flagship store in the world: a 510 square meter store in a former theater from 1919 in Den Bosch.
Internationally, stores are opened in Konstanz and Hamburg in Germany, Nice in France and locations in Ukraine, Poland and Switzerland. Shop-in-shops will include Åhléns department stores in Sweden. Outside of Europe, Scotch & Soda operates four stores in the United States, where there are now 43. In the following year branches in Israel, Qatar, the United Arab Emirates and Kuwait are added. New branches are also opened in Australia and India. Finally, Scotch & Soda will set up further showrooms and offices in Shanghai and Milan in the spring.
October 2021
In October, Scotch & Soda announces further expansion plans and plans to open an additional 15 stores and seven shop-in-shops worldwide. The stores will be located in several major cities including Paris, Madrid, Mumbai, Bucharest, Perth and Riyadh. To support the expansion, the company opens an additional distribution center in Hoofddorp, The Netherlands. The center is 27,500 square meters and features solar panels and vertical gardens.
To support the company’s growth, Scotch & Soda’s owner, Sun Capital, is investing a further 15 million euros. In addition, Sun Capital has converted a EUR 200 million shareholder loan into shares to provide financial support for the fashion brand in dealing with the Corona crisis. Scotch & Soda expects sales to fall by four percent in 2021. The drop in sales is relatively small compared to many other brands. The company owes this to the good results of its online store, which recorded an 18 percent increase in sales.
January 2022
As if Scotch & Soda didn’t already have enough countries in its portfolio, China is now being added. In January, the fashion brand will open a flagship store in Shanghai’s Xintiandi district. The store has an area of 289 square meters and will be furnished according to the “Free spirit” concept launched in 2021. A store at Taikoo Li Mall, also in Shanghai, will open later in the year, followed by two stores at Beijing Sanlitun and Shanghai Reel malls.
April 2022
After opening up China, Scotch & Soda announces further expansion. The company plans to open 20 new stores within six months, including in London, Milan, Washington DC, Dubai, Doha, Tel Aviv, Johannesburg, Cairo, Shanghai and Beijing. Once these expansion plans are implemented, Scotch & Soda will have 50 stores in North America, 155 in Europe, 5 in China and 18 in the Middle East and Africa.
June 2022
The already announced store opening in Milan becomes reality. The flagship store is 185 square meters and extends over two floors. Frederick Lukoff, Managing Director of Scotch & Soda, said in a statement: “The opening of our flagship store in Milan strengthens our presence in Italy, an important market that we believe has great potential. It’s a great opportunity to reach new local and international customers in a prestigious location and introduce them to our brand inspired by the free spirit of Amsterdam. The opening is an important milestone in our current European and global growth strategy”. In addition to the opening in Milan, Scotch & Soda will open further stores in Europe in the second half of the year, including a flagship store in Covent Garden, London, as well as new locations in the Netherlands , Germany, France, Belgium, Sweden and Denmark.
November 2022
Scotch & Soda’s expansion is paying off. The fashion brand is recording double-digit sales growth. As a result of that growth, sales are also above pre-pandemic levels. The proceeds in 2019 were 328.7 million euros. Sales of 342.5 million euros are now on the books.
2023
After the strong expansion, which was made possible in part by the multi-million dollar cash injections from parent company Sun Capital, rumors surfaced in March that Sun Capital was considering a sale of Scotch & Soda, as reported by Sky News, citing anonymous sources. Scotch & Soda did not comment on the rumors to FashionUnited.
On March 20, Scotch & Soda announced that it had filed for bankruptcy for its Dutch business.
This translated post previously appeared on FashionUnited.nl.