LONDON – Asos has confirmed UK media speculation that it is eyeing struggling Arcadia brands Topshop, Topman, Miss Selfridges and HIIT.
“The board believes this would represent a compelling opportunity to acquire strong brands that resonate well with its customer base,” Asos said on Monday, warning that there may be no certainty of transaction.
The online fashion giant was responding to UK media reports that identified it as a new leader in the bidding process, after UK retailer Next abandoned the race.
Asos is said to be bidding against the likes of Asda’s new owners, billionaire brothers Blackburn Mohsin and Zuber Issa; Group of genuine brands; Chinese retailer Shein and Boohoo – and a winner could emerge in the coming days.
Boohoo could be the next to pull out of the race, having just confirmed their acquisition of the Debenhams brand and assets.
“The biggest competition Asos faces for Topshop comes from the partnership between JD Sports and Authentic Brands, as the two retailers’ experience in running physical stores may mean they are bidding higher to keep some of the stores. of the brand, ”said Chloe Collins, senior retail analyst at GlobalData Retail.
“Although Chinese online specialist Shein is also at the forefront, it is relatively new to the UK market and its brand value is much lower than that of Asos. An offer was also made by the Issa brothers, who recently acquired Asda, but their specialization in value clothing for family shoppers means they may struggle to understand Topshop’s young market and give to the brand. the renewal it desperately needs, ”she added.
Asos, a pure-play digital company, is not in talks to buy physical Topshop stores, which could threaten much of Arcadia’s workforce, according to media reports. Arcadia real estate is sold separately and does not form part of the auction.
Its acquisition could mirror Boohoo’s deal with Debenhams, which saw Boohoo buy all of Debenhams’ brands and website, but not real estate.
However, if Asos is to keep up with its fast fashion competitors, it might consider opening physical stores. Boohoo would open a physical space in London’s West End.
Asos added that any acquisition would be funded from cash reserves – a testament to its strong performance throughout the pandemic.
In the four months to Dec.31, the retailer reported a 23% increase in sales to 1.3 billion pounds. It was able to offset the drop in demand for second-hand clothing, and its active customer base grew from 1.1 million to 24.5 million, while return rates fell.
Asos is a strong candidate to buy Topshop and its sister brands. Its growing customer base is more aligned with Topshop’s than Boohoo’s younger audience. It has an existing wholesale relationship with Topshop as well as a multi-brand model, which mirrors that of Topshop.
And that could surely help accelerate Topshop’s e-commerce strategy, a major weak point in Arcadia’s pre-pandemic business. It could also reignite the once-animated image of the struggling retailer, clouded by bankruptcy and sexual harassment allegations against Arcadia owner Philip Green.
Despite her strong performance, Asos never managed to achieve the kind of fashion credentials Topshop once had, with its own runway at London Fashion Week and highly anticipated collaborations with Everyone, from designers Christopher Kane and Mary Katrantzou. to celebrities Kate Moss and Beyoncé.
Beyoncé launched her Ivy Park sports line in partnership with Green. She has since bought back the shares.
“Asos would be, by far, the most complementary new owner of Topshop, Topman and Miss Selfridge. The brands are already popular sellers through its third-party platform, proving that there is a strong customer overlap, and Asos’s impressive global reach would help Arcadia brands target new buyers, ”Collins said. .
“While Asos wouldn’t accept any stores and it’s unclear whether it would keep the brands’ websites or just use exclusivity to bolster its own platform, the digital prowess of the retailer will help. brands to gain popularity because they have so far fallen behind the competition online, ”she added.
Arcadia’s bankruptcy, announced at the end of 2020, was one of the biggest victims on the UK shopping street. The group has a pension deficit of 350 million pounds and 13,000 jobs remain at risk.
Matt Smith and Dan Butters, along with other restructuring partners at Deloitte, are working to find suitable buyers for the company’s eight retail brands.
Last December, Australian retailer City Chic Collective Ltd. bought plus size label Evans for £ 23million, but Topshop remains the group’s most attractive asset.