Frasers Makes ‘Strategic’ Boohoo Investment
Frasers Group has its fingers in a little bit of everything right now.
After steadily building its stake in Asos to 10.6 percent as of last week from 5 percent in October, now the clothing retail empire run by CEO Michael Murray has made a “strategic investment” in fast-fashion e-tailer and self-styled ethical discussion leader Boohoo, according to an investor disclosure published Tuesday.
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Frasers cited the Kourtney Kardashian collaborator‘s popularity with young women as a factor behind the financial move. It said Boohoo offers “synergies” with similarly positioned brands it owns, such as Missguided and I Saw It First.
While digital-hungry Frasers is believed to be interested in Asos because it owns Topshop, it could face competition from Anders Povlsen, owner of Danish fashion group Bestseller. Povlsen was part of a recent equity raise that gives him a 26 percent stake in Asos as the e-tailer’s largest investor. Camelot Capital Partners controls 11 percent and Ashley’s stake puts him in third place.
Frasers reportedly is also in advanced talks to acquire cycling retailer ProBikeKit. And while most of its holdings are in fashion retail, Frasers last week inked a strategic partnership with AO World, investing 75 million pounds ($95 million) for an 18.9 percent stake, or about 109 million shares of the online electricals retailer, which could help it better manage bulk deliveries as it sells heavy gym equipment as well as furniture through Sofa.com.
While new acquisitions show that value is still the operative word, Murray seems focused on an upmarket strategy. Frasers stake in fashion house Hugo Boss is now at 34 percent. The company still owns the luxury contemporary fashion retailer Flannels, and has plans to open six new stores this year. It also has been repositioning House of Fraser from a luxury department store to a luxury chain with a smaller footprint. And it was under Murray’s watch when Frasers acquired the distressed Saville Row tailor Gieves & Hawkes last November.
But as its looks to expand operations, including a new joint venture deal—between Frasers Group Asia Sdn Bhd and PT Map Active Indonesia—for the expansion of Sports Direct across Indonesia, the company could be unloading an asset or two. Following the acquisition of 14 brands from JD Sports last year, which includes premium designer retailer Tessuti and men’s wear retailer Scotts, local media said Frasers is looking to sell men’s wear brand Pretty Green, the apparel line founded by musician and lead singer Liam Gallagher of the Oasis rock band.
Next & Reiss Talks
Local media suggests that Next and Warburg Pincus are in talks to sell Reis. A report from Sky News indicated the two are working with bankers on an auction involving several interested buyers.
What isn’t clear is Next’s plans for Reiss. Next acquired its initial 25 percent stake in Reiss from the private equity firm in March 2021. In August 2022 Next picked up its option to acquire an additional 26 percent stake to give it majority ownership at 51 percent.
While Next could sell its 51 percent stake, it also could be working with bankers for a valuation to price the company so it can acquire the 49 percent ownership held by Warburg. Or it could elect to keep its majority control and work with the new owner who acquires Warburg’s position. The latter option would match private equity’s investment and exit pattern.
Next CEO Simon Wolfson said in April when the company reported on 2022 earnings that more acquisitions could be on the way. That suggests that Next could be looking to acquire a larger stake in Reiss. Wolfson said one must-have criteria is that the Next Total Platform must add value to the target deal, and its stake in Reiss already proves that point. Other factors include great brands, great management and the right price. But Next still could sell its Reiss stake if it feels a sale would boost its war chest as it hunts for even better deals down the road.
Gym+Coffee
Gym+Coffee has been putting the 17 million euros ($17.3 million) it raised in July to good use.
The funding, led by Castlegate Investments, has helped the Irish athleisure brand continue expanding in the U.K. The company is getting into wholesale through a planned launch this summer on The Very Group’s online retail site Very.co.uk., according to Drapers.
Founded in 2017 by Irish singer-songwriter Niall Horan, the brand’s men’s and women’s lifestyle workout apparel is known for hoodies made from recycled materials, as well as T-shirts and beanies. It also has a 10-store retail footprint of “clubhouses,” as well as an international presence via e-commerce platforms across Europe, Australia, New Zealand and North America. The company says it is 100 percent carbon neutral on track to become a certified B Corp.
M&Co
AK Retail Holdings, which acquired bankrupt M&Co in February, will relaunch budget family-fashion chain as a digital retailer on Wednesday.
M&Co will restart with women’s apparel, with additional categories and new app to follow.
Although all 170 locations were closed following M&Co’s December bankruptcy, now it appears that the nameplate will once again grace U.K. high streets.
British media indicates that 50 stores will open in the next two years, with the first arriving this fall. Exact locations haven’t been disclosed by AK Retail, which is in talks with landlords for the new doors. AK Retail is the parent company of plus-size retail chain Yours Clothing and the tall women’s brand Long Tall Sally.
Additional reporting by Jessica Binns.
