Naf Naf, a well-known women’s fashion brand in France, has been placed under judicial recovery due to significant cash flow difficulties, as confirmed by the commercial court in Bobigny, Seine-Saint-Denis.

This latest development marks the third such procedure for the company in the last five years, raising serious concerns about its future viability.

The company's management, which was acquired by the Turkish firm Migiboy Tekstil in June 2024, has expressed its intention to continue operations and implement a recovery plan.

Currently, Naf Naf employs 588 individuals in France and had a total of 650 employees within the last six months, according to court data.

The brand is reported to have a debt of €44 million against a projected revenue of €47 million for 2024, placing it in a precarious financial position.

The court noted the company’s inability to meet its payable liabilities with the available assets, characterizing its financial status as one of cessation of payments.

However, it was also mentioned that there are potential pathways for recovery based on the presented activity forecast and available cash flow.

Naf Naf has been granted a six-month observation period, during which its situation will be reassessed at a hearing scheduled for July 23. The CFDT, a French trade union, voiced concerns about the implications of this ruling, suggesting it introduces a prolonged period of uncertainty for both employees and stakeholders.

When it was acquired, Migiboy Tekstil had committed to preserving approximately 90% of the jobs and maintaining around a hundred stores, investing €1.5 million to facilitate the acquisition.

The recent acquisition saved 521 jobs and allowed the brand to retain a significant retail presence in France while also overseeing operations in Spain, Italy, and Belgium.

The trade union has cautioned that the management must demonstrate the capacity for the brand to operate at least temporarily, which includes ensuring that stores are stocked and that logistical arrangements are restructured under constrained financial conditions.

The management has asserted that there are 800,000 articles in stock and that the company sells around 140,000 articles each month.

Despite these assurances, the CFDT anticipates that if the recovery plan fails, drastic organizational changes, including store closures and further downsizing at the headquarters, are likely.

The consequences of not meeting the recovery conditions could lead to liquidation, involving the sale of the brand, its inventory, and retail locations, with profoundly negative social ramifications.

Naf Naf, which was established in 1973 by brothers Gérard and Patrick Pariente, attained prominence in the 1980s, particularly noted for its cotton combinations that sold over three million pieces.

The brand gained substantial traction in the 1990s through notable advertising campaigns characterized by the slogan "Le Grand Méchant Look." After facing financial hardships exacerbated by the COVID-19 pandemic, Naf Naf entered judicial recovery in May 2020 and was subsequently taken over by the Franco-Turkish group SY International.

The firm, struggling with debts largely accumulated due to unpaid rent during the pandemic, found itself in judicial recovery again in September 2023 prior to its acquisition by Migiboy Tekstil.

The broader economic context reveals a decline in the stability of various sectors in France, including significant layoffs in retail and heavy industry.

Recent statistics indicate a rise in the number of companies facing financial distress across several industries, underscoring a precarious backdrop for businesses like Naf Naf.