Asos buys Topshop, Topman, Miss Selfridge for £330m

Online fashion retailer Asos has bought four brands, including Topshop, from the collapsed Arcadia group for £330m, administrators said on Monday, placing 2,500 store jobs at risk.

The deal for Topshop, Topman, Miss Selfridge and HIIT brands, but not 70 physical stores, will be funded out of cash reserves, Asos said in a separated statement.

ASOS will pay around £265m for the brands and £65m for current and future stock. One-off restructuring and transaction costs come in at around £20m.

Incremental core earnings from the deal in fiscal 2020-21 would be offset by initial ramp-up costs.

The transaction is expected to complete on February 4. Around 300 staff across design, buying and retail partnerships will transfer to Asos, leaving hundreds of jobs at risk for store staff.

Deloitte secured the sale of Evans to City Chic in December 2020 for £23m. Fast fashion retailer Boohoo is still in exclusive talks to buy Burton, Dorothy Perkins and Wallis from the remnants of disgraced tycoon Philip Green’s empire.

The demise of Green's brands and high street chain Debenhams follows the failure of retailers such as Cath Kidston, Oasis and Warehouse during the past year. Boohoo last week snapped up the Debenhams brand and online business in a £55m deal.

Green bought Arcadia in 2002 for £850m, and in 2005 paid a £1.2bn dividend to its registered owner, his wife Christina.

Arcadia went into administration last November, hit by both changing shopping patterns and the Covid-19 pandemic. At the time of its collapse, it employed around 13,000 people and had 444 shops.

"These are strong brands that resonate well with our core customer base. Brand equity is strongest in the UK and they have an established presence in both the US and Germany, two of our key strategic markets, Asos said.

“The acquisition of these iconic British brands is a hugely exciting moment for ASOS and our customers and will help accelerate our multi-brand platform strategy," said chief executive Nick Beighton.

“We have been central to driving their recent growth online and, under our ownership, we will develop them further, using our design, marketing, technology and logistics expertise, and working closely with key strategic retail partners in the UK and around the world.”

AJ Bell investment director Russ Mould said the acquisition looked "a decent deal and one that gives Asos the ability to earn higher margins from clothes that it was already selling through its platform under a previous partnership deal".

“By owning the Arcadia assets rather just being a wholesale platform, it will have more control over supply chains and an opportunity to increase their reach, such as pushing the brands in the US via department store partner Nordstrom."

However, he said the downside was the large number of people working for Arcadia who will now become unemployed as stores are shut.

“It means the high street is left with even more vacant stores, and names strong enough to keep standing, such as Zara and H&M, are left in an even stronger position as competition is further reduced for those people who still prefer to go into a store to buy, or at least browse, clothes.”