Frasers Group ventures into pureplay with GBP20m Missguided acquisition

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François Locoh-Donou, president and CEO of F5. Credit: F5

Frasers Group is adding its first fast fashion pureplay to its roster, after acquiring Missguided in a GBP20m (US$25.2m) deal; a 'punt worth taking,' according to a GlobalData apparel analyst.

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In a filing to the London Stock Exchange, Frasers Group, which owns brands including Hugo Boss, House of Fraser and Sports Direct, says it has acquired certain intellectual property of the online fast-fashion retailer, Missguided Limited, Mennace Limited and Missguided (IP) Limited, which all entered into administration on 30 May, for a cash consideration of GBP20m (US$25.2m).

The statement explains that following completion, the business will be operated by the administrator under a transitional agreement for a period of approximately eight weeks. Once this period ends, Frasers Group intends to operate Missguided as a standalone business within the Group.

Chief executive Michael Murray said in a statement Frasers Group is delighted to secure a long-term future for the fast-fashion brand and believes it will benefit from the strength and scale of Frasers Group’s platform and operational excellence.

He added: “Missguided’s digital-first approach to the latest trends in women’s fashion will bring additional expertise to the wider Frasers Group.”

The news of the acquisition follows the announcement the company fell into the hands of administrators on Monday (30 May).

Dan Smith, Daniel Butters and Benjo Dymant of Teneo were appointed joint administrators for the company after it was reportedly issued with a winding-up petition by clothing suppliers who are owed millions of pounds.

Missguided was founded by Nitin Passi in 2009 and grew to around three million customers, however, Passi stepped down from his role as chief executive last month and the company was understood to be cutting 63 jobs alongside appointing Teneo as an investor to “explore strategic options” for the company.

Last autumn, the online retailer was saved from collapse when the retail investor Alteri, backed by investment firm Apollo, stepped in. Alteri announced redundancies in December as part of a turnaround plan.

Boohoo was reported to be one of the parties interested in the fast-fashion retailer, however GlobalData apparel analyst Darcey Jupp says the move from Frasers Group is a ‘punt worth taking’.

She explains: “Frasers Group will be taking a new direction with its acquisition of Missguided, as the value online retailer is a clear digression away from the group’s typical sports and premium fascias. However, its purchase of the IP for just GBP20m is certainly a punt worth taking, particularly if Frasers can leverage its operational scale to recapture Missguided’s young audience and make the brand competitive once again.”

Jupp also believes that operating Missguided as a standalone brand is a wise move, as its young target audience would not be inclined to shop at its other fascias like House of Fraser.

She adds: “While the group typically runs multichannel operations, it is clear from Missguided’s previous failed attempt at physical retail that this should not be considered for the brand, but continuing its concessions in select Asda stores would be a good way to capture demand from convenience-seeking consumers.”

Jupp also points out it’s vital for Frasers to strengthen Missguided’s core online proposition and ensure its products are trend-led and competitively priced.

She says: “With inflation spiralling in the UK, there is an opportunity for Missguided to capture young consumers who are keen to continue purchasing apparel but must trade down.”

Frasers Group, which owns a number of retailers, including department stores House of Fraser and Flannels, and sports retailer Sports Direct, added online retailer Studio Retail Limited to its roster in February this year in a GBP26.8m deal.

A company statement issued at the time said: “As Frasers Group seeks to elevate its customer journey including a flexible repayment proposition, the acquisition of SRL will provide Frasers Group with expertise and synergies that will accelerate this ambition.”

Frasers Group had also reportedly taken an interest in acquiring sports footwear retailer Footasylum in January this year.

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