Asos PLC agreed to offload 75% of its stake in the Topshop and Topman brands, in a deal which values them at £180 million.
The online fashion retailer on Thursday sell it will sell three-quarters of its ownership in the brands to Danish firm Heartland by forming a 75:25 joint venture with the Nordic company.
Heartland is the holding company belonging to Danish billionaire Anders Holch Povlsen, and also owns clothing retailer Bestseller, which runs 2,800 retail stores across 30 countries. It holds a significant stake in Asos.
Asos will get £135 million for its stake in the two brands, which have not operated physical shops since they came under the online shop’s umbrella several years ago.
It said it will also have the right to sell a further 5% in the brands for £9 million at a later date, as part of the deal.
Chief Executive Jose Antonio Ramos Calamonte said the move will help ‘accelerate our strategy to both offer customers the best and most relevant product and to turn Asos into a company that delivers sustainable, profitable growth’.
Asos bought high street stalwarts Topshop and Topman out of administration in 2021, along with Miss Selfridge and HIIT, for £330 million, during the collapse of Sir Philip Green’s Arcadia Group.
However, the retailer has also been struggling of late, plunging to a £120 million half-year loss in April as sales plummeted nearly 20%.
In a trading update on Thursday morning Asos said it has made ‘progress’ on a turnaround plan that has seen it try to sell more of its own-brand clothes this year.
The company said it is also using artificial intelligence to ‘better understand’ why people are returning clothes orders.
Holch Povlsen was named as Scotland’s richest man in this year’s Sunday Times rich list, and is reportedly the country’s biggest landowner.
As well as owning a retail empire including Bestseller, which was founded by his parents in 1975, he owns about 220,000 acres in the Highlands.
Heartland chief executive Lise Kaae said the deal will bring ‘the best of the Topshop and Topman brands to customers globally, while supporting Asos’s strategy to obtain a more efficient capital allocation’.
Asos also on Thursday provided a trading update for financial 2024. It said its expected adjusted earnings before interest, tax, depreciation and amortisation to be at the top end of market consensus, while sales will be slightly below previous guidance. All other guidance remains the same.
At the start of the year, Asos had guided a 5% to 15% sales decline in financial 2024, which ended this week. It also guided for positive Ebitda.
In financial 2023, adjusted Ebidta fell 32% to £124.5 million from £183.9 million the year before, while revenue fell 10% to £3.55 billion from £3.95 billion.
In the first half of financial 2024, Asos posted an adjusted Ebitda loss of £16.3 million, swung from £4.6 million in positive Ebitda a year before, while revenue fell 18% to £1.51 billion from £1.84 billion a year earlier.
Also on Thursday, Asos announced a debt refinancing that will include the offering of £250 million in convertible bonds due in 2028 and the partial cash repurchase of its outstanding issue of £500 million in convertible bons due in 2026.
Asos shares were up 13% to 414.80 pence early Thursday in London.
source: PA
Copyright 2024 Alliance News Ltd. All Rights Reserved.
