BlackMilk, founded in 2009 and popularised the following decade for its colourful printed leggings and mini-dresses, will wind down production at its Brisbane factory, chief executive Jackie Kruger announced on Friday.
"This is one of the most difficult decisions we have made as a business," she wrote on the company website.
It is expected that manufacturing will be moved to China, where BlackMilk already works with supply partners.
Items will still be designed from the company's studio in Brisbane.
"I know not everyone will agree with this decision. I respect that," Ms Kruger said.
"As CEO, this decision sits with me."
BlackMilk had previously vowed to keep some manufacturing onshore after combining local and overseas production for years, but said the model could no longer support the business's future.
"The reality for us is that manufacturing in Brisbane is no longer commercially viable in a way that allows us to deliver a range of products into the future and continue investing in the business," Ms Kruger said.
Blackmilk is increasingly using cotton, other natural fibres and recycled polyester, and its Brisbane factory lacked "specialist production capabilities" for many of these fabrics, Ms Kruger said,.
"This does not mean that offshore manufacturing automatically produces a better product," she said.
"Quality remains BlackMilk's responsibility, regardless of where a product is made."
The move comes at a tough time for the rag trade, with softening market sentiment coming up against rising input costs across labour and shipping, while and raw material costs drive up fabric prices.
At the same time, consumer spending has been softening as households grapple with the cost of living crisis and higher interest rates.
The most recent data from the statistics bureau showed retail spending fell by almost two per cent in June, following a flat outcome in May.
BlackMilk was founded by James Lillis, and has grown to ship to more than 200 nations.
Mr Lillis died suddenly while holidaying overseas in 2024.
On the company's website blog, Ms Kruger acknowledged the local production team's role in the brand's history.
"Their craftsmanship, skill and care have helped create products worn by hundreds of thousands of customers around the world, and their contribution to this brand cannot be overstated," Ms Kruger said.
"Our immediate priority is supporting every affected team member through this transition with care and respect."
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