London streetwear brand Trapstar seeks buyer amid cash crunch

UK streetwear label Trapstar has been placed on an insolvency marketplace as the business seeks a buyer to navigate working capital challenges, according to a report by London-based business publication City AM.

The fashion house was founded in 2005. It achieved global prominence by pioneering the drop retail model, utilising short-notice social media announcements to release limited-edition collections and generate consumer demand.

The brand attracted a high-profile following, with its apparel worn by international artists including Jay Z, Rihanna, Stormzy and Central Cee.

Revenue drops following pandemic peak

The business experienced accelerated demand during the Covid-19 pandemic, with turnover peaking at just under 40 million pounds in 2022. This growth was driven by strong sales of its core product categories, which include hoodies, tracksuits and puffer jackets.

Subsequent financial periods showed a downward trajectory. In 2023, profit declined from 7.4 million pounds to 1.2 million pounds, while sales decreased to 17.7 million pounds in 2024.

Advisers to Trapstar told the publication that the recent performance was structural rather than a loss of consumer interest. “Management have advised that recent revenue decline has primarily been driven by working capital constraints impacting inventory availability, rather than any underlying demand or brand performance,” the advisers stated.

Inflationary pressures impact operating margins

The brand highlighted macroeconomic headwinds in its 2024 financial statement, noting that it had been a challenging year for the business as both customers and the supply chain had to deal with rising inflation against the backdrop of an uncertain economic outlook. The company added that it saw an increase in costs which led to a fall in the operating margin.

Despite the financial contraction, the management team expressed confidence in the underlying loyalty of its consumer base.