LONDON (Reuters) - British online fashion retailer ASOS has bought the Topshop, Topman, Miss Selfridge and HIIT brands from the administrators of Philip Green’s collapsed Arcadia group for 265 million pounds ($364 million) so it can accelerate its multi-brand strategy.
The deal for Arcadia’s prized brands, which will also see ASOS buy 30 million pounds of stock, does not include their 70 stores, putting thousands of jobs at risk and underlining the shift of power towards online retailers.
Green’s Arcadia empire fell into administration in November owing creditors hundreds of millions of pounds and threatening more than 13,000 jobs.
Its collapse was the biggest corporate failure of the COVID-19 pandemic so far.
While the internet has been reshaping the British retail landscape and the clothing sector for more than a decade, multiple lockdowns to stem the coronavirus crisis have accelerated the move to home shopping.
According to the Centre for Retail Research, the UK retail sector lost 177,000 jobs in 2020, with a further 200,000 expected to be shed this year.
The four acquired brands generated revenue of 265 million pounds in full-year 2020 and already trade on ASOS, which targets twenty somethings.
“We saw this as a compelling opportunity to acquire four really iconic British brands, brands that we know resonate really well with our existing core customers,” CEO Nick Beighton told Reuters.
“These brands grew at over 40% in our first four months of the (2020-21) year, so we know they work well, we know our customers love them. They’re an acceleration to our existing strategy,” he said.
ASOS’s deal with Arcadia’s administrators Deloitte, fully funded from cash resources, will see about 300 employees across design, buying and retail partnerships transfer to the group.
Shares in ASOS, which was founded in 2000, were up 4% at 0940 GMT, extending year gains to 51.4% and giving it a market capitalisation of 4.7 billion pounds - some 1.9 billion pounds more than the 137-year-old Marks & Spencer.
ASOS said incremental core earnings from the deal in its 2020-21 year would be offset by initial ramp-up costs. There would also be additional one-off restructuring and transaction costs of about 20 million pounds.
“It will be financially double digit accretive in full year 2022 and beyond,” said Beighton.
On Friday, ASOS’s rival Boohoo said it had entered into exclusive talks with Arcadia’s administrators over the purchase of the Dorothy Perkins, Wallis and Burton brands.
If a deal is struck there it would complete the break-up of Green’s empire.
($1 = 0.7279 pounds)
Reporting by James Davey, editing by Estelle Shirbon, Keith Weir and David Evans
Our Standards: The Thomson Reuters Trust Principles.