Frasers has luxury fashion retailer Matches in its sights.
The ever-acquisitive Mike Ashley reportedly could take over control of the luxury retailer formerly known as Matchesfashion in a deal that could be completed in days, according to overseas sources. Sky News first reported on the talks between Ashley’s Frasers Group and Matches.
Reports indicate that Frasers would likely pay a minimum of 50 million pounds ($63.2 million), although sources indicate that the price tag could go as high as 75 million to 80 million pounds ($94.9 million to $101.2 million). Those figures are substantially below the 800 million pounds ($1 billion) that majority owner private equity firm Apax Partners paid in 2017 to founders Tom and Ruth Chapman. At the time, venture capital firms Scottish Equity Partners and Highland Europe elected to retain minority stakes. Since the acquisition, Apax has made additional investments in the firm, the most recent was a 60 million pound ($73.2 million) infusion — 40 million pounds ($48.8 million) in equity and 20 million pounds ($24.4 million) in debt — this past January.
Matches has had financial struggles going back to November 2021 when company auditors warned on “material uncertainty” if there was no improvement in its future performance. Former Asos CEO Nick Beighton joined Matches in August 2022 as its new leader, charged with turning around the fashion firm’s fortunes. While Matches has shown some improvement under Beighton’s leadership, the company did have layoffs in September.
Beighton said there’s “nothing I can say at the moment.” Frasers and Apax did not respond to a request for comment.
A sale of the company is one of a number of options that’s on the table, one source said. This individual also indicated that a sale is being discussed due to a debt obligation that’s coming due.
The Chapmans founded Matchesfashion.com in 1987 as a single brick-and-mortar store in London. The store was the first to sell designer brands that included Prada and Versace. The operation shifted to an online model in 2013 and it was rebranded Matchesfashion.com. In its heyday, the business became an online powerhouse in the luxury fashion space. Working on special collaborations gave the brand the reputation as the go-to site for high-end fashion, helping it compete against the larger Yoox Net-a-Porter and FarFetch. When the Chapmans elected to sell the company, the strength of the business saw Apax competing with rival bidders that included Bain Capital, KKR and Permira.
Frasers roots are centered in Sports Direct, a sporting goods retailer. It was Sports Direct that acquired the House of Fraser department store chain out of bankruptcy in August 2018 for 90 million pounds ($115 million), after which Ashley rebranded the firm as Frasers Group.
Ashley has long had a thing about distressed firms, an area where he can rebuild a company to its former glory without having to pay top dollar for the asset. In addition to House of Fraser, Ashley snapped up luxury retailer Flannels in 2017 and Jack Wills in 2019. Last year saw Frasers focus on digital fast fashion, acquiring Missguided and I Saw It First. And this year the company has been snapping up shares of distressed British fast fashion e-tailers. Frasers Group this past October became Boohoo’s largest shareholder. Frasers also upped its share in e-tail competitor Asos, become its third largest stakeholder.
Online fashion has had its share of difficulties, particularly as luxury sales slowed following the COVID pandemic. On Monday, struggling Farfetch reached an agreement with South Korea’s Coupang for $500 million in emergency funding as part of a “pre-pack” administration process. Billed as South Korea’s version of Amazon, Coupang’s white knight role will allow FarFetch to continue operations as a private firm.
In the case of Matches, Beighton’s achievement in steadying the business is said to have garnered strong interest from investors. It also helps that Matches has a strong track record in the luxury sector. While Frasers is believed to have the inside track in current talks, British high-street retailer Next plc reportedly could be waiting in the wings. Next has expressed interest in Matches, but it wasn’t immediately clear whether or not it submitted a bid.
Beighton has an inclusive business approach for getting the Matches back on track, even if that may mean collaborating with a mass-orientated retailer such as Next. Next’s focus has always been on the U.K. as a whole rather than just wealthy Londoners—something that’s more in line with the likes of Matches.
Next has Reiss, Cath Kidston, made.com and FatFace, which it acquired in a 100 million pound ($121.6 million) deal in October, in its portfolio. In August, Reiss shifted gears to go more premium with its new line, Atelier—an homage to the in-house team of designers at Reiss, who have all held positions at luxury fashion labels, most notably its women’s wear design director, Jamie O’Hare, a former Tom Ford designer. Atelier’s price points range from 155 pounds ($195.99) to 1,995 pounds ($2,522.62).
In November, Matches partnered with Aston Martin, the British maker of luxury sports cars, in a deal that allowed them to gain access to a new luxury customer base, while Aston Martin clients will receive early access to collection drops, as well as a private shopper based at 5 Carlos Place, Matches’ London townhouse.
If Next were to acquire Matches, it would have access to nearly every household in the U.K., from those shopping for basics to homeware to luxury goods.
Simon Wolfson, Next’s CEO since 2001, has grown his business to include more than 500 retail branches and a website that’s visited by more than 3 million customers.
With contributions from Hikmat Mohammed
