From fashion forward to failure: What went wrong for Cue?

Claudia Schiffer was once the face of Cue. Now it and Veronika Maine have 'lost relevance' It was a modern-day success story, an idea sparked by Beatlemania that became deeply woven into the fabric of Australia's identity. Long a cornerstone of Australian fashion, Cue repeatedly reinvented itself to outlast the times, with the proof hanging in the wardrobes of generations of women. It's success was a far cry from its humble beginnings as a business that started by selling T-shirts. Now, Cue and sister label Veronika Maine have become the latest casualties in Australian retail, with a team of experts last week rallying in an effort to stop the company from being consigned to history. But what inspired the start of the clothing brand in 1968 ultimately became its downfall. 'On the ball' It was during a holiday to London in 1964 that Rod Levis, a young Australian law student, found himself swept up by the youth culture that was taking England by storm. Levis knew nothing about fashion but saw an opportunity for an Australian brand to sell clothing that appealed to young people. He opened Levis's in Sydney's Strand Arcade, selling clothes that capitalised on the popularity of The Beatles and stocking items created by cutting-edge designers. The success of the business allowed Levis to expand into designing and manufacturing, and he launched Cue in 1968. "Back then the clothing choices were mumsy and dowdy or too sophisticated," Levis told Marie Claire in 2018. "Cue made way for a new wave of young fashion inspired by what was going on in London and Paris. "The name says it all: it means to be on target, on the ball, ready for the next thing." By the 1970s, Cue was stocked in Myer stores across Australia and the company began opening standalone stores as demand grew. The 1980s was transformative for Cue, with the brand creating its signature tailored suits that became a staple for working women. With the dawn of the 1990s, Cue was an unstoppable force. Supermodel Claudia Schiffer became the face of its 1997 campaign, and in 1998 the more contemporary brand, Veronika Maine, was launched. 'Really iconic company' When the new millennium arrived the company had fully cemented itself as an Australian fashion juggernaut, with stores around the country and its clothes stocked by both Myer and David Jones. But wholesale was a key area for the company too, and the popularity of the brands was so great that it allowed Kristen Tassone to start her own business onselling the clothes 26 years ago. "They were the biggest brands on a wholesale level," she recalled. "They knew what they were doing. It was quality craftsmanship, it was super commercial price points and really comprehensive collections that people enjoyed. "They were just a really iconic company to work with, and it shaped the rest of my 26 years and counting in the fashion wholesale industry." Tassone spent 10 years selling Cue and Veronika Maine to her clients before the company shifted its focus to direct-to-consumer channels. "It was greatly missed when they pulled back from wholesale," she said. "I'm just really grateful that I was able to start a successful business with Cue and Veronika Maine as my kickstart." The Cue and Veronika Maine labels were removed from wholesaling entirely by 2008, before the economic shockwaves of the Global Financial Crisis rippled through Australia's retail sector as consumer spending plummeted. It took years for confidence to return to the retail sector, and when it did, it coincided with the rise of online shopping, fast fashion, and more competition. By 2017, Marcs and David Lawrence — two of Cue's direct competitors — had collapsed, before being purchased by Myer. Australian luxury retailer Oroton went bust later that same year but was rescued at the last minute by major shareholder Will Vicars. In November 2018, Cue marked 50 years in business, and the following year announced an exhibition at the Powerhouse Museum in Sydney. But within months of it opening, the COVID-19 pandemic hit. 'Losing touch' The pandemic fundamentally changed Australian retail. The rise of working from home saw people swapping corporate for comfort, a reliance on online shopping, and more competition from retailers overseas — particularly on price. When people did return to the office, they favoured a more casual approach to workwear and that, along with cost-of-living pressures restricting consumer spending, and a lack of aspirational brand identity curated on social media, created a perfect storm that Cue and Veronika Maine could not navigate. For a company that was once at the forefront of what consumers wanted, the labels had lost their way. It's a scenario that seasoned retail analyst and restructure expert James Stewart has seen play out repeatedly during his 40 years in the industry. "The single biggest reason, in my view, that mid-market apparel brands end up in trouble is because of the product, because they end up losing touch with their target market, and their target market just doesn't see their product proposition at their price points as value anymore," he said. "When you lose relevance to your target customer, then they start shopping somewhere else. "You can blame it on Shein, you can blame it on the resale market, you can blame it on consumer sentiment, all of which will have some impact … but at its core, what's in your control is product, range architecture, price point, and brand proposition. "Every apparel retailer that I've dealt with, almost all of them have had exactly the same problem. They lose relevance. "Your job as a retailer is to read your target market and pivot your product proposition accordingly." Levis's son Justin had tried to do just that as the executive director of Cue and Veronika Maine, until his departure in 2024. Two weeks after his exit, the eponymous label of young Australian designer Dion Lee collapsed. Cue had acquired a stake in 2013. Lee's brand has since been acquired by US retail group Revolve. Selling up shop Behind the scenes, Cue was struggling financially. Filings lodged with ASIC for the 2024 financial year saw the company record a $14.1 million loss — six times greater than the $2.3 million loss from the previous year — and its total liabilities outweighed its assets by $3.3 million. Despite that, the financial report noted Cue had "received assurance from the shareholders … to continue its operations" for 12 months. By April 2025, Rod Levis sold Cue to Hilco Capital, a British company that specialises in turning around troubled businesses. Shortly after acquiring Cue, Hilco appointed retail veteran Eric Morris as chairman, installed Melanie Remai as its CEO and recruited Josephine Barbaro as its chief financial officer. Despite the appointments, the company remained in distress. Online shoppers have complained about not receiving their orders, and landlords and suppliers have not been paid. Morris stepped down as chairman in June, and Hilco put Cue up for sale in August. Stewart, who has a longstanding working relationship with Hilco but is not involved in the current process, said its decision to purchase and sell Cue within 16 months indicated that all was not well. "Hilco's acquired this business from a distressed seller … with a view that if they can turn it around and make it work, that's great and that creates value," he said. "But you've got a buyer of last resort trying to sell something that they couldn't fix." Within a month of putting the business up for sale, Barbaro and Remai announced their exits. Days later, Hilco called in the receivers. It couldn't save Cue. Restructure, rebuild, regrow The future is still uncertain, but it's still early days in its receivership. FTI Consulting said the decision to put the company into receivership was because its operating costs were outweighing its sales, even though they had improved. Cue's latest financial report lodged with ASIC at the end of May showed it had incurred a net loss of $5 million, while its liabilities outweighed its assets by more than $3 million. The report highlighted that its forecasts were dependent on Cue "meeting a number of operational and financial assumptions that are subject to uncertainty". "If [Cue] is unable to achieve these assumptions, there is a material uncertainty that may cast significant doubt on [Cue's] ability to continue as a going concern," it stated. While receivers are now tasked with working out what the future of Cue and Veronika Maine may look like, the company made the "difficult" decision on Friday to close five of its 51 stores, saying it was in the "best interest of the business". Its department store footprint will remain unchanged for now, but Stewart said he expected any rebuilt version of the business would be significantly scaled back. "It's a bit like pruning a tree, so you decide what's my strongest channel to market, where are my customers buying, where am I getting the most margin out of it and what's sustainable in the long term?" he said. "Some of the restructuring I've seen, often they don't cut hard enough … they're actually better ripping the whole band-aid off, letting the whole thing breathe a bit, and then coming back and rebuilding over time." There remains the possibility that Cue might become a receivership success story, much like Marcs, David Lawrence and Oroton. "There has been good initial interest from potential buyers in the sale process, highlighting the strong brand recognition and positive sentiment for Cue and Veronika Maine," the receivers said. Those potential buyers could be businesses that have been in Cue's position, including Myer and Oroton Group. Initial offers by any prospective bidders are expected to be made in early October. Any offer will inch Cue closer to achieving 60 years in business — the same decade that inspired its creation. [Image text:] CUCDESIGN WINTER1996