Frasers Group acquires assets from MatchesFashion

Frasers Group bought out parts of MatchesFashion from administration. The deal did not include the stock worth £80 million or the remaining 250 employees.

The Sports Direct founder Mike Ashley’s retail group, controlled by Ashley, 59 years old, has announced that it purchased the intellectual property and brand rights of the failed luxury retailer, for an undisclosed amount.

Frasers, as part of this agreement, has granted Teneo, Teneo’s administrator, a license to allow it to sell its stock in order to return to creditors.

Frasers has not yet made it clear if they plan to retain Matches’ brand, trademark, and domain name after the administration process is complete.

Frasers, the company that owns Sports Direct, House of Fraser, and Flannels, put Matches in administration last month. This was less than three months since it bought the business from Apax Partners for just £52 million. The deal caused Apax Partners to suffer heavy losses. Frasers was the debt-holder, and the only secured creditor.

The agreement has raised further questions about whether creditors who are still owed money will ever receive it after the collapse of the retailer. Frasers placed the business into administration when it owed over £200 million. Unsecured creditors are now out more than £36 millions. Suppliers of Matches, including Burberry Gucci and Saint Laurent, are expected to receive less than one penny per pound.

In a progress report for administrators published last week, Teneo noted that 11 bids were received by Matches at the end of last month. It also stated that it continued to review all bids. A source claimed that there were no “credible offers” for the business. Frasers was said to have considered buying back the IP and brand as their “best option”.

Tom and Ruth Chapman founded Matches in 1987. The name was allegedly inspired by the habit of Tom to smoke 40 cigarettes a day. The company sells luxury brands such as Prada and Gucci via its stores and website.

It has struggled in recent years to stay profitable due to lockdown curbs which have depressed demand for expensive clothing and a slowdown globally across the luxury industry. Nick Beighton was appointed chief executive of Asos in August 2022. He launched a three year turnaround plan aimed at attracting younger clients and “getting fundamentals right”. The plan was not successful due to the rising cost of living.

Matches’ most recent annual report showed a £67.2million operating loss in the 12 months ending January 2023. This compares to a £37.5million loss in the year before.

Beighton, 55, attacked Frasers last week for placing the struggling luxury retailer in administration . He called it “unnecessary”. Frasers, however, said that it would not fund a turnaround because the company had “consistently failed to meet its business plan goals” and made losses. Frasers reportedly deemed that the additional funding required, estimated to be around PS40 million at the time, was “in excess of what they considered viable”.

According to the administrators’ report, Apax Partners “didn’t have an appetite to fund” their investment requirement.

Kien Tan is a senior retail advisor at PwC. The accountancy firm questioned if there was a place for luxury online marketplaces, as consumers are returning to direct-to consumer experiences in person. Farfetch was one of the digital marketplaces that struggled. It narrowly avoided bankruptcy last year by securing a $500,000,000 rescue deal. Another ecommerce company, Net-aPorter, is for sale.