Asos has sold a majority stake in Topshop for £135m in a deal that will help it repay debts and could see the brand return to the high street, as fashion retailers struggle after a soggy summer.
The online fashion seller said it had sold a 75% stake in Topshop, the group which it bought just over three years ago for £330m, to Heartland, an arm of Bestseller, the Danish fashion business controlled by the major Asos shareholder Anders Povlsen.
Povlsen, a Danish billionaire who is Scotland’s biggest landowner, already owns brands including Jack & Jones and Vero Moda via his Bestseller business.
Topshop, which had 70 stores, fell into administration in late 2020 as part of the collapse of Sir Philip Green’s Arcadia empire. It was relaunched selling clothing online only the following year by Asos.
José Antonio Ramos Calamonte, the chief executive of Asos, said Thursday’s deal could see the return of the Topshop brand to physical stores.
Shares in Asos shot up more than 16% on Thursday after it announced the deal. The company will continue to sell Topshop and Topman items on its website but will now pay a royalty fee, which it said would dent profits by between £10m and £20m a year.
The deal values Topshop at £180m, down from the £265m paid to buy the brand from administrators to Sir Philip Green’s Arcadia empire in 2021. The total £330m price tag included £65m of stock.
Asos will hold on to a 22.5% stake and its existing Topshop partner Nordstrum just over 2%, with Heartland controlling the rest.
Analysts said net debt, which stood at £348m when last reported in April, would fall by about £150m. Asos is issuing £250m in new bonds and buying back existing ones in a deal which analysts at Panmure Liberum said would “alleviate some of the short-term concerns around the company’s debt position”.
Calamonte said the sell-off would help “accelerate our strategy to both offer customers the best and most relevant product and to turn Asos into a company that delivers sustainable, profitable growth”.
Calamonte said Topshop could return to the high street with its own stores, as part of the deal with Bestseller, as well as putting clothes into more department stores, as it currently does with US group Nordstrum. “We might open stores. We will consider it for sure but we have no specific agreement to open a certain number,” Calamonte said.
Calamonte said Asos had put the Topshop brand “back in shape for growth”, having revamped its supply chain, product quality and creative direction.
He said the deal came about after unsolicited approaches and Bestseller’s was selected as the best offer to “accelerate and make the brand more accessible for consumers”.
after newsletter promotion
Asos has been struggling to turn around its performance, selling off piles of unwanted stock and attempting to improve its fashion credentials as shoppers swing back to the high street after a boom in online shopping during the pandemic.
Nick Bubb, an independent retail analyst, said that Mike Ashley, the founder of Sports Direct whose Frasers Group owns House of Fraser and Flannels as well as a large stake in Asos, “may not be best pleased” to see another major shareholder, Heartland, take the controlling stake in Topshop.
Calamonte said sales at Asos had continued to fall as the company pulled back on promotions to try to sell more profitably at full price.
Separately on Thursday, clothing retailer Primark warned shareholders that comparable sales at the clothing chain have fallen in the last six months.
It said sales are expected to decrease by about 0.5% in the six months to 14 September, driven by a 0.9% decline in the last three months.
The retailer’s owner, Associated British Foods, said: “This primarily reflects unfavourable weather in the UK and Ireland… which resulted in lower footfall and particularly impacted sales of our seasonal lines in womenswear and footwear.”
