How ASOS became the new king of the high street

Online clothing retailer ASOS has snapped up a swathe of brands from the administrators of Philip Green’s insolvent Arcadia group.

Online clothing retailer ASOS will spend more than £300m to buy Arcadia’s Topshop, Topman, Miss Selfridge and HIIT brands from the administrators of Philip Green’s insolvent group, says Jonathan Eley in the Financial Times. The deal involves an upfront payment of £265m for the brands, plus £30m for existing inventory. ASOS will also honour £35m of forward purchase orders. However, many of Arcadia’s 13,000 employees are likely to lose their jobs as the agreement “does not include the group’s 70 stores, including its Oxford Street Topshop flagship”.

The deal is not only ASOS’s “first acquisition of a fashion brand”, but also a “stark change from its strategy of creating its own brands”, says The Times. As a result, investors need to be aware of the problems of “integration risk [and] management distraction” as well as the dangers of “buying an asset from Sir Philip Green after the BHS debacle”. Still, if things go well ASOS should be able to use Topshop to “push further into Europe and the US” without the burden of its “oversized, dated store estate”, justifying the price tag. Adding Topshop’s online operations will boost sales by £220m immediately.

This is a key moment for a fashion industry that, until very recently, “was conceived around clothes shopping as a leisure pursuit and a social activity”, says Jess Cartner-Morley in The Guardian. While boutiques are still “powerful status symbols at designer level” – witness LVMH recently refurbishing the historic Parisian store La Samaritaine for €750m – “mass fashion” is likely to end up mostly online. 

Recommended

Persimmon yields 12.3%, but can you trust the company to deliver?
Share tips

Persimmon yields 12.3%, but can you trust the company to deliver?

With a dividend yield of 12.3%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate compa…
1 Jul 2022
Share tips of the week – 1 July
Share tips

Share tips of the week – 1 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
1 Jul 2022
Bunzl: boring is good for business
Share tips

Bunzl: boring is good for business

Food-service distribution company Bunzl is not a terribly exciting business, but it looks cheap and could be a great investment, says Rupert Hargreave…
30 Jun 2022
Five dividend stocks to beat inflation
Share tips

Five dividend stocks to beat inflation

During periods of high inflation, dividend stocks tend to do better than the wider market. Here, Rupert Hargreaves pick five dividend stocks for incom…
30 Jun 2022

Most Popular

Five dividend stocks to beat inflation
Share tips

Five dividend stocks to beat inflation

During periods of high inflation, dividend stocks tend to do better than the wider market. Here, Rupert Hargreaves pick five dividend stocks for incom…
30 Jun 2022
Don’t try to time the bottom – start buying good companies now
Investment strategy

Don’t try to time the bottom – start buying good companies now

Markets are having a rough time, so you may be tempted to wait to try to call the bottom and pick up some bargains. But that would be a mistake, says …
1 Jul 2022
UK house prices are definitely cooling off – but are they heading for a fall?
House prices

UK house prices are definitely cooling off – but are they heading for a fall?

UK house prices hit a fresh high in June, but as interest rates start to rise, the market is cooling John Stepek assesses just how much of an effect h…
30 Jun 2022