Kester Black has quietly emerged from voluntary administration and its founder Anna Ross has departed as a director of the business, with the prominent beauty brand now in the hands of its managing director.
Launched in Melbourne in 2014, Kester Black offers vegan and cruelty-free nail polishes, lipsticks and skincare products.
The business experienced rapid success, building a dedicated following of ethically-minded consumers, and a reputation as one of Australia’s fastest-growing cosmetics brands.
That trajectory changed on July 9, when the company trading under the Kester Black name appointed Stephen Dixon of Hamilton Murphy Advisory as voluntary administrator.
Documents listed by the Australian Securities and Investments Commission (ASIC) show creditors voted in favour of a Deed of Company Arrangement (DOCA) on August 13, ensuring Kester Black will remain a going concern.
They also show New New New Pty Ltd, which is helmed by Kester Black’s managing director Fergus Sully, acquired the company and its assets on August 1.
Kester Black sustained losses in three straight financial years, according to an August 5 creditor’s report obtained by SmartCompany. This culminated in a net loss of $567,535 in the 2024 financial year.
The company’s financial position meant it was not able to meet its accrued and ongoing tax liabilities, administrator Stephen Dixon told creditors.
Kester Black had been unable to move stock that had been rendered obsolete by “evolving fashion trends”, according to Dixon, and this contributed to the financial difficulties.
The business also sustained significant flood damage at its Auckland warehouse, faced “excessive” product storage costs, and battled to align the financial records of its Australian and New Zealand operations.
Attempts to clear out aging inventory had mixed results.
Kester Black engaged in a heavy discounting campaign, which saw sales more than double over the 2024 financial year to $3.9 million.
However, the cost of online advertising to drive those sales reduced Kester Black’s gross profit margin from 32% in the 2023 financial year to 13%.
In addition, the business disclosed a inter-company loan valued at $345,356 to its New Zealand-based subsidiary.
Dixon concluded in the creditors’ report that “the recoverability of this loan account is unlikely”.
Those factors “made it increasingly difficult for the company to sustain ongoing trading and severely impacted on the company’s financial capacity to discharge its due and payable liabilities”, leading to Dixon’s appointment of a voluntary administrator.
Founder Anna Ross ceased her role as director of Kester Black in June this year, according to the creditor’s report, but stepped back from the position in May.
The circumstances of Ross’ departure from the role were not outlined in the creditors’ report.
In addition, the company changed its name from Kester Black Pty Ltd to 2362 1653 825 Pty Ltd in late June.
Fergus Sully, a longtime Kester Black employee who most recently served as its managing director, was listed as a director of 2362 1653 825 Pty Ltd at the time of Dixon’s appointment.
SmartCompany has contacted Kester Black, Ross and Sully for comment.
Dixon traded the Kester Black business through the administration, in order to “preserve the company’s business and assets and to facilitate the restructure of the company”.
However, the fact Kester Black was under external administration was not publicised on the company’s website, or social media, where the brand commands nearly 77,000 Instagram followers.
There is no suggestion the fulfillment of customer orders was affected by the administration process.
But the creditor’s report does reveal why Dixon chose not to advertise the business to prospective buyers.
“Immediately prior” to launching a marketing campaign for Kester Black and assets, Dixon identified that “critical intellectual property” necessary to run the business was actually held by a related third-party entity.
SmartCompany has asked Dixon about the owner of that intellectual property.
Dixon also accepted an offer from a related entity to purchase the business and its assets.
This entity’s offer to buy the Kester Black brand and its assets was contingent on the sale being “completed on a confidential basis to avoid any erosion to the goodwill of the company”, Dixon said.
The company and its assets were subsequently sold for $146,220 on August 1.
The offer was for market value and considered a commercial transaction, Dixon noted.
As part of the deal, the related entity took on all existing full-time employees and agreed to assume responsibility for their accrued annual leave.
The related entity is New New New Pty Ltd, which counts Fergus Sully as a director.
The Australian Business Register shows New New New Pty Ltd has used the Kester Black business name since August 6, and is registered at the same West Melbourne address previously used by the Kester Black brand.
In the course of the administration, Dixon also received a Deed of Company Arrangement (DOCA) proposal from Sully, which was supported by the company’s creditors at a meeting on August 13.
Dixon supported the DOCA proposal in his report to creditors, noting it would offer unsecured creditors 28 cents on the dollar, compared to between 13 and 17 cents in case of liquidation.
While Kester Black endured that administration process, the cosmetics brand remained publicly active in early August, most prominently through a new collaboration with reusable water bottle brand Frank Green.
On August 9, just over a week after the sale of the Kester Black brand and its assets, Frank Green launched a giveaway competition to promote a new line of colour-matched bottles and Kester Black nail polishes.
The collaboration offered limited-edition bottles and nail polishes in six unique shades, available for purchase on the Frank Green website.
SmartCompany asked Frank Green about the new collaboration, and Kester Black’s apparent voluntary administration, on August 9. The high-profile water bottle brand did not respond.
However, at time of writing, products related to the Kester Black collaboration are no longer available for purchase on the Frank Green website.
Kester Black’s administration, and its apparent re-emergence through New New New Pty Ltd, is the latest detail in a frequently cited story of small business success.
After seeing a gap in the Australian market for cruelty-free nail polishes, Ross worked with a chemist to formulate a range of vegan, water-based alternatives, in defiance of established brands and their reliance on animal testing.
The initial range proved a success, with the brand building a loyal following in Australian, New Zealand, and select European markets.
Ross was recognised by Telstra as Australia’s Young Business Woman of the Year in 2016, the same year Kester Black became the first beauty brand globally to earn B Corp certification.
Kester Black expanded its range of ethically-produced cosmetics, and in 2021 claimed to fulfil as many as 30,000 orders per year.
The brand also closed a $2.1 million equity crowdfunding campaign in October that year, while pledging to expand its operations further abroad.
However, the business’ growth was not without its challenges: global supply chain hold-ups, the result of COVID-19 disruptions, caused some shipments to face delays of up to 14 months.
And these business challenges did not abate once border restrictions eased.
In his creditor’s report, Dixon suggested Kester Black placed “large stock orders… following previous supply issues experienced by the company after the COVID-19 pandemic”.
The stock purchased included “slow moving sale lines and obsolete stock”, adding to the company’s overhead costs.
Kester Black faced further difficulties in January 2023, when heavy storms in Auckland caused extensive damage to stock stored in its warehouse.
The business opted to salvage the damaged stock, pain-stakingly removing waterlogged packaging and offering the products to customers in a ‘Perfectly Imperfect’ sale.
Speaking to SmartCompany in January this year, Ross said the sale was a hit with customers, who appreciated the brand’s commitment to sustainability and reviving usable stock.
Even so, the process came with a cost.
“We made a big loss on the nail polishes,” said Ross at the time.
“The process of actually handling each one would have cost more than the cost [of the product].”
Reflecting on the second-chance sale, Ross shared her appreciation for those who helped build the brand over the past decade.
“Our customers are the best people ever,” she said.
“I’m so glad that we built the company around ethical sustainable values because it means that we attract the right customers.”
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
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