Ascension sells up for a £1 as green fashion dream stalls

Ethical fashion etailer Ascension has been sold to dotcom entrepreneur Luke Heron for £1 in a move highlighting the challenges that face dedicated green brands as they try to break into the mainstream.

Formerly known as Adili, the ethical clothing website will be merged with Heron's Green Baby brand, which sells ethical baby products, after it started to experience cash flow problems late last year.

Although the firm's sales were rising by 20 per cent per annum, it was unable to generate enough working capital to continue, despite increasingly fraught fundraising efforts. The situation came to a head at the start of last month when Ascension was forced to suspend trading of its shares on the junior stock market "pending clarification of its financial position".

At that point, it started looking for a buyer, but failed to secure a deal with a large high-street name that would have resulted in its own label fashion being sold in its potential purchaser's stores. After that deal fell through the company was left facing administration or liquidation, or selling for a token sum.

Adam Smith, Ascension's chief executive, told The Guardian, that the company had been hampered by the weaker punch packed by ethical brands operating in a highly competitive online environment. "It is brands that drive traffic to websites," Smith said. "We have built a brand from scratch and that costs money."

But he added that the company had also shown that "ethical fashion can be directional and sell for prices bang in line with the high street".

In fact, in some ways Ascension and other specialist green clothing brands have been too successful and, as a result, are now facing growing competition from mainstream names on the high street.

The government last week released an update to its Sustainable Clothing Action Plan, which was dominated by environmental commitments from major retail and clothing firms, such as Sainsbury's, Marks & Spencer, and Nike. Meanwhile, Tesco launched a new Fairtrade knitwear and an extended school uniform range, and pledged to become the number one retailer of Fairtrade cotton clothing by sales volume.

Similarly, online fashion retailer Asos.com launched a micro-site called the Green Room last month to sell brands with a "social and environmental ethos".

Moreover, a recent report from the Cooperative Bank indicated that expenditure on organic, Fairtrade or recycled goods had risen threefold in the last decade to £36bn by 2008, with ethical fashion sales generating revenues of £172m - an increase of 93 per cent on the previous year.