Asos (LON: ASC) In Talks to Buy Arcadia’s Famous Brand Topshop

  • January 25, 2021 12:43 PM GMT
  • Kunal Sawhney
    Kunal Sawhney
    CEO Kunal Sawhney
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    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

Asos (LON: ASC) In Talks to Buy Arcadia’s Famous Brand Topshop

Summary

  • British online fashion giant Asos is in talks with administrators of Arcadia retail.
  • The trend of acquiring the high-street brands has been picking up steam in the aftermath of the Covid-19.
  • Boohoo is said to be in talks to acquire Debenhams brand in a £55-million deal.

British online fashion and cosmetic retailer Asos Plc (LON: ASC) has confirmed that discussions are being carried out with the administrators of Arcadia regarding the acquisition of Miss Selfridge, HIIT brands, Topshop, and Topman.

The UK AIM-listed online fashion retailer perceives a compelling opportunity to acquire strong brands that can resonate well with its client base. As of now, nothing can be said regarding this transaction. However, the potential acquisition shall be financed from the company’s reserves.

Also read: Asos share falls despite 329 per cent rise in profit, cautions on consumer spending

According to the recent trading update for the four-month period ended 31 December 2020, the AIM-listed fashion retailer recorded a growth of 23 per cent year-on-year in sales, while its active customer base increased to 24.5 million. Overall, ASOS is well positioned to capture the global opportunities despite the short-term uncertainties through continuous development in ASOS platform and customer service.

The pandemic-induced lockdowns have led to deserted high-streets with the retail being among the worst-hit sectors due to Covid-19. With the coronavirus staying longer than anticipated, the high-street retail stores are shutting stores. Declining footfall and rents have severely dented their revenues. However, non-essential retail has managed to sustain itself through online presence.

Also read: Covid-19 Impact-Job Redundancies Continue to Rise in High Street Retail

The trend of acquiring high-street brands has been picking up steam. It has been reported that online retailers such as Boohoo, JD Sports, Frasers Group might consider acquiring some of the Arcadia’s stores. Boohoo is said to be acquiring Debenhams brand in a £55-million deal. These acquisitions might sound an opportunity for the e-commerce giants; however, these acquisitions might also lead to several job redundancies as physical stores will be closed.

Asos seems to have sensed an opportunity to tap into the high-street business space. The online fashion giant could enhance its portfolio offering by acquiring Arcadia stores. This implies that Arcadia brands would trade online only. Due to the coronavirus impact, the Arcadia stores in the UK collapsed in December after witnessing a year-long struggle. Despite years of hard work and investment, Arcadia failed to keep up with the digital age and collapsed into administration.

 

 


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