Us fashion faces bleak reality: bankruptcy hits key brands amidst economic strain

The American fashion industry is grappling with a severe crisis, as major retailers like Matches, Farfetch, and Ssense file for bankruptcy, signaling a turbulent period for independent designers and the broader sector.

A perfect storm: economic downturn and retail challenges

Launched in 2022 with ambitions to bolster emerging American talent, Fashion Trust US (FTUS) is now facing the harsh realities of a challenging market. The initial optimism surrounding the program has been overshadowed by a series of high-profile bankruptcies, including those of Saks’ holdings – Neiman Marcus and Bergdorf Goodman – highlighting the vulnerability of even established brands.

Small brands suffer most

While large corporations struggle, it’s the smaller, independent brands that are bearing the brunt of the economic downturn. Rising costs, fueled by tariffs and global supply chain disruptions, are squeezing profit margins, leaving many unable to compete. The recent imposition of tariffs has further reshaped the global fashion landscape, adding to the pressure on US-based companies.

Limited support, growing need

Unlike European counterparts with robust government funding and extensive award schemes, the US fashion ecosystem offers limited institutional support. The CFDA/Vogue Fashion Fund, while significant, represents one of the few avenues for emerging designers. Tania Fares, founder of FTUS, acknowledges the systemic shortcomings, stating that “the system here is fast and very commercially-driven and support hasn’t quite caught up with that reality.”

A new approach: focus on business acumen

FTUS is attempting to address this gap by shifting its focus. The organization now requires applicants to have at least seven years of Business experience, prioritizing brands with a solid foundation. The board rigorously scrutinizes financial structures and Business models to ensure they can withstand the current headwinds. “It was very important for me to do seven years, not three or four or five,” Fares explains, “So you’re not as young, you’re a bit more established.”

Mentorship and strategic guidance

Beyond financial assistance, FTUS offers a crucial mentorship program led by executives from firms like Bond Creative MGMT. This program provides tailored advice on everything from financial management to merchandising, recognizing that simply providing funding isn’t enough. “The biggest learning has been that financial support on its own is not enough,” Fares notes. “I feel designers need guidance just as much.”

Rising stars and growing recognition

Despite the challenges, the FTUS Awards continue to recognize talent, with Lii, a New York-based brand, taking home the ready-to-wear prize. Ashlyn, Advisry, and AnOnlyChild also secured accolades. The prize pool of $600,000 – up from $525,000 last year – is funded through donations, gala sponsorships, and Google’s investment. The awards are attracting a growing audience, including celebrities like Jodie Turner Smith and Travis Scott, as well as industry figures from Paris and New York.

Building a sustainable future

FTUS is strategically positioning itself in Los Angeles, recognizing the need to cultivate a distinct identity beyond the crowded New York fashion scene. The organization leverages LA’s vibrant stylist community – including Kara Welch and Jamie Mizrahio – to establish credibility and attract brand partnerships. Ultimately, Fares believes that by focusing on supporting genuinely strong businesses, FTUS will gain recognition and solidify its role in the US fashion landscape. “We’re focused on growing in a considered way rather than trying to accelerate too quickly,” she concludes, a sentiment echoed by Diotima’s Rachel Scott, who used the prize money to stage her brand’s first runway show.