ASOS, the leading online fashion retailer, is reportedly exploring the possibility of selling Topshop as part of its ongoing turnaround strategy. While ASOS remains tight-lipped about the matter, early reports indicate that the sale is in its preliminary stages, with no firm commitment. The exact valuation of the Topshop brand and any negotiations with potential buyers remain uncertain.
ASOS’s acquisition of Topshop, alongside Topman, Miss Selfridge, and HIIT, occurred following the collapse of the Arcadia Group in early 2021. ASOS invested £265 million in acquiring these four brands, in addition to £30 million for their stock. Notably, ASOS transitioned these labels to an exclusive online presence, emphasizing the strategic value of these iconic fashion brands within its core customer base.
Subsequently, ASOS formed a strategic partnership with Nordstrom, enabling the American retailer to retail and promote the Topshop, Topman, Miss Selfridge, and HIIT brands while taking a minority stake to facilitate their growth.
One of the most intriguing aspects of this potential sale is the list of prospective buyers. Among the anticipated bidders are those who expressed interest in late 2020. This includes Next, a company known for its recent acquisitions of brands like FatFace, Reiss, and Joules. Authentic Brands Group, an active acquirer of UK assets, could also express interest after its purchases of Ted Baker and Hunter. JD Sports, which previously contemplated a bid in partnership with Authentic, may return to the scene.
Boohoo Group, known for its brand acquisitions in the past, has faced challenges similar to ASOS in recent times, making it a less likely contender. Shein and M&S, rumored to have shown interest in 2020, may also be in the mix. Additionally, Nordstrom is a noteworthy candidate to consider.
Frasers Group, recognized for its frequent brand acquisitions, is a key player in the retail landscape. However, its preference for cost-effective purchases could pose challenges if ASOS seeks a premium price for the prominent UK brand. Intriguingly, Frasers Group holds a substantial stake in ASOS, potentially indicating a significant role in any potential developments. Speculation has emerged regarding the possibility of a bid or merger involving both ASOS and Boohoo, as Frasers has increased its holdings in both companies.
A noteworthy aspect of these potential bidders is their operation of physical stores, raising the prospect of Topshop, Topman, and other brands making a return to brick-and-mortar retail. This could manifest through multi-brand setups or mono-brand stores.
The central question remains: Does a return to physical stores align with current trends? In the past 18 months, the unexpected resurgence of in-person shopping has challenged e-tailers like ASOS and Boohoo. A new owner might choose to reestablish Topshop stores in response to this trend.
The recovery of physical stores has led to surprising developments, such as e-tailer The Range’s decision to introduce physical spaces for the recently acquired Wilko brand. Furthermore, brands like Monsoon and Jigsaw, which had previously closed stores, are now reopening them.
The puzzle that remains is why ASOS is considering selling brands it acquired relatively recently. The company had shown a strong commitment to these brands, evidenced by the launch of a «bold new visual identity» for Topshop and Topman roughly a year ago. However, the optimism that prevailed during and immediately after the pandemic has since waned. ASOS has encountered significant challenges, including financial losses, a declining share price, and the need to secure new financing earlier this year.