- IP sold to China-based fast-fashion giant
- Potential for Frasers-Shein partnership
- ASOS in Topshop sale talks
Mike Ashley-controlled Frasers (FRAS) has sold its Missguided brand to China-based fast-fashion giant Shein just over a year after buying the UK fast-fashion label out of administration.
Financial details were not disclosed, but Frasers insisted the deal has already sparked ‘exciting discussions’ with Shein around collaboration opportunities across its portfolio of brands, sending shares in the FTSE 100 retail conglomerate up 1.6% to 807.5p.
The deal is also significant since it marks Shein’s first acquisition of a British brand as the aggressive e-commerce colossus targets further growth in the UK.
Shein has emerged as a major force in online retail and is one of the key reasons why the likes of Ashley-controlled ASOS (ASC) and Boohoo (BOO:AIM) are struggling.
WHAT DID FRASERS’ CEO SAY?
Frasers said it had sold the intellectual property and trademarks of Missguided to Shein in line with its ‘disciplined approach to managing its portfolio of brands’, though the Sports Direct, House of Fraser and Flannels owner has retained Missguided’s real estate and employees, which have now been integrated into its fashion division.
Chief executive Michael Murray commented: ‘With I Saw it First and Missy Empire, we now have a foothold in women’s digital-first fashion. Retaining the combined Frasers fashion teams whilst rationalising our portfolio in this space to focus on fewer brands makes a lot of sense in the current climate. We are also excited about the ongoing discussions around further collaboration between Frasers Group and Shein.’
WHY THE SALE MAKES SENSE
Shore Capital believes the Missguided sale could be ‘a precursor to leveraging Frasers’ expansive UK store portfolio, enabling Shein to bridge the gap between online and offline shopping experiences’ and that such a strategic partnership would be advantageous to both companies.
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Frasers would benefit from the footfall generated by Shein shoppers, to whom it could cross-sell its ranges, whereas Shein would be able to leverage Frasers’ brick and mortar stores as ‘an entry into traditional retail channels’.
Russ Mould, investment director at AJ Bell, explained that Frasers ‘could feasibly be interested in a distribution deal whereby it can sell its products on Shein’s platform, while also using its Sports Direct and Flannels stores as a potential return hub for the Chinese partner. The more people coming through its doors, the more opportunities it has to try and sell its products.’
ASOS IN TOPSHOP SALE TALKS
The Missguided disposal accompanied the revelation that ASOS is in talks to sell the iconic Topshop brand to US-based Authentic Brands, the owner of Reebok, Forever 21 and Ted Baker.
ASOS, whose shares rose 3% to 397.3p on the news, acquired the online Topshop brand for £330 million from the administrators of Arcadia in February 2021 and a sale could see Topshop return to the high street.
The Topshop revelation follows the delay of ASOS’s full year results by a week to 1 November, and in another red flag for investors, the news Frasers has reduced its stake in the hard-pressed online fashion group from 23% to 19%.
‘While the sale could offer ASOS a financial lifeline and allow Authentic Brands to potentially revive Topshop on high streets’, explained Shore Capital, ‘these developments raise questions about ASOS’s long-term viability.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Ian Conway) own shares in AJ Bell.
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