Asos Plc agreed to buy Topshop, one of Britain’s best-known apparel brands, and several other labels for 295 million pounds ($405 million), as online fashion retailers swoop in to purchase well-known retail names that are closing stores.
Arcadia Group, the insolvent retail empire of Philip Green, will sell the Topman, Miss Selfridge and HIIT brands to Asos in the all-cash transaction, according to a statement Monday. The purchase includes 30 million pounds of inventory. Asos shares rose as much as 4.6% in London.
“This move is a market-share land grab” to boost growth in Europe and the U.S., wrote Aneesha Sherman, an analyst at Sanford C. Bernstein.
Labels that have dominated the country’s shopping centers for decades have recently become targets for e-commerce. Last week rival Boohoo Group Plc agreed to buy the Debenhams brand for 55 million pounds. As the online retailers have little interest in running physical stores, that’s leading to the loss of thousands of jobs in an industry that already shed more than 100,000 positions last year.
Asos isn’t taking on any of the shops linked to the four brands, meaning about 70 outlets will close. However, the retailer would consider allowing a flagship store on London’s Oxford Circus to keep selling Topshop clothes through a third-party arrangement, Chief Executive Officer Nick Beighton said on a call with journalists. No decision has been made.
The retailer said it’s taking on 300 jobs in the transaction in design, purchasing and retail partnerships. The company is trying to expand its customer base and has a strong businesses in the U.S. and Europe, where Topshop brand-recognition is high. The fashionable label has struggled in recent years since Green’s retail empire faltered after the sale of his BHS department store in 2015 and as pandemic lockdowns further crimped sales.
Green was lambasted in parliament in 2016 for the sale and subsequent collapse of BHS. He was criticized for placing the pension of current and former BHS workers at risk and enriching his family through the payment of large dividends. He eventually agreed to inject 363 million pounds into the BHS pension plan.
Arcadia’s pension plans are in an “assessment period” and could be placed in the Pensions Protection Fund, a lifeboat program for failed companies, the pensions regulator said in December. As a creditor to the company, they will be seeking funds from the sale of Arcadia’s assets by Deloitte, which is the administrator.
Topshop and the other brands had combined revenue of about 1 billion pounds in 2019.
Beighton said the website has been selling Topshop and Topman products for the past two years and the brands’ sales were strong, jumping by 41% during Christmas. The company plans to keep selling Topshop products via third-party retailers.
“This is a strategy that is already working extremely well,” he said in a phone interview. “The brands are great but they were sitting in a business with distress.”
Asos plans to deepen Topshop’s partnership with U.S. department store Nordstrom and will seek other possible ties, Beighton said.
The U.K. retailer also committed to an order of 35 million pounds for garments in the future, which would put the total deal price at 330 million pounds.
The retailer fended off competition from Authentic Brands Group LLC, owner of Barney’s, SheIn Group Ltd., a Chinese online fast-fashion retailer, and fashion retailer Next Plc.
Boohoo is in talks to buy the remainder of Arcadia’s brands, including Wallis, Dorothy Perkins and Burton.
Beighton said he didn’t feel a sense of victory as an online retailer taking over a brand once considered to be the pinnacle of Britain’s shopping districts.
“The most important thing for us has been getting this business acquired, transferring 300 people over and continuing to build our business,” he said. “Any other emotions are not appropriate.”
(Updates with comment on flagship store in fifth paragraph)