Naked Brand Group Limited (NASDAQ: NAKD) stock recently traded at $0.70 and is down 8.3%, at the time of this writing. The recent activity that correlates with this news is the fact that investors are becoming aware of the company’s poor-performing fundamentals and are pulling out of the stock.

The rise and fall of Naked Brand Group’s fashion trend

Naked Brand Group Limited (NAKD) was considered to be Europe’s top 20 fastest growing companies.  The company is a designer and manufacturer of apparel and swimwear outfits. It has collaborated with many popular brands for several projects. The apparel company’s mission outline states “focused on enhancing the architecture of the body”.

However, contrary to its mission statement, NAKD has not been focusing on its own fundamentals which have been severely weakened. The apparel company has been reporting net losses for consecutive five years and what is worse is that these losses have ascended with the passing of years. The company reported a loss of $19.06 million in 2016 and in 2020 it reached a net total of $35.17 million.

In 2017, NAKD stock was truly in the spotlight when it traded at an all-time high of an exceptional $1420. However now, due to the weakened outlook of the company’s fundamentals, NAKD stock trades around 77 cents. The stock did soar recently in this year (January) but it was due to the hype that retail investors of reddit had caused. It did provide a strong rally to NAKD’s stock which surged to a whopping 300% in three days but quickly died down.

This is because the external motivator for the positive stock movement could not overcome the underlying weak fundamentals of NAKD. The reason why NAKD stock has not been performing well is that its overall sales have declined and the company reported $15.02 million negative cash flow in 2020 (compared to $9.82 million in 2019).

Shifting exclusively to an e-commerce platform may not be a good idea

Naked Brand’s recent attempt to focus its shifting from physical retail business to e-commerce line has shown quite an impressive growth. However, in doing so, it has exclusively focused on its e-commerce platform “FOH Online”. The overall resurgence of retail business due to the easing of the pandemic lockdown will not benefit the company’s retail subsidiary and Flagship brand, Bendon now that it is focusing on FOH Online.

Furthermore, this growth in the sales of its e-commerce does not compensate for the overall loss in the company’s net revenue growth. Several experts of fashion and apparel businesses suggest that the Naked Brand Group (NAKD) may have fallen victim to the harsh and unreasonable trends of the fashion industry. The brand simply may have run its course of popularity and consumers do not seem to buy any hype around Naked Brand’s latest fashion trend and marketing.

At this rate, investors have already started associating the NAKD stock with a bearish trend, and the unimpressive fundamentals are painting a dim picture for the company’s overall outlook. Naked Brand Group (NAKD) needs to pull a rabbit (and a fashionable one) out of its hat and fast in order to retain customers and investors.