Asos has bought Topshop, Topman, Miss Selfridge, and HIIT out of administration for GBP265m

Asos has bought Topshop, Topman, Miss Selfridge, and HIIT out of administration for GBP265m

As UK online fast-fashion retailer Asos today (1 February) swooped to acquire the Topshop, Topman, Miss Selfridge and HIIT brands out of administration from retail giant Arcadia Group, industry analysts note the opportunity to grow the four brands globally and say Asos will give them the revival they need.

Chloe Collins, senior apparel analyst at GlobalData:
"Asos is a complementary new owner for Topshop, Topman, Miss Selfridge and HIIT and will be able to give the brands the revival they desperately need. The brands are already popular sellers through Asos' third-party platform, with sales growing 41% in the four months to 31 December 2020, so there is strong customer overlap which should allow for a seamless transition. Though Asos plans to retain some of Arcadia's design and buying teams, the brands have undoubtedly lost their fashion authority in recent years, so support from Asos, which is much more reactive to trends and relevant among younger consumers, should help steer them back in the right direction.

"In another bleak day for retail workers, the deal unsurprisingly does not include any of the Arcadia brands' stores, and Topshop, in particular, will certainly be missed from high streets across the UK. However, as shoppers become ever more accustomed to purchasing online, Asos's digital prowess will aid the brands in gaining top of mind appeal, with full integration onto its own platform the best route to success as the brands' own online offers have always been behind the competition. Asos's impressive global reach will also help the brands target new international shoppers, and its plans to boost Topshop's partnership with Nordstrom will hopefully reignite US shoppers' love for the brand following the closure of its physical stores there in 2019."

Greg Lawless, analyst at Shore Capital:
"The acquisition will allow Asos to accelerate its own brand strategy overlaying its design, buying, and marketing capabilities to strengthen its own brand portfolio. The brands will be fully integrated into the Asos platform utilising the existing global warehouses and technology platforms.

"Whilst Asos is acquiring the brands outright for its pure-play platform it highlights that it will select the best retail partners to accelerate the global opportunities. In particular, it highlights an acceleration of the US strategy with the Nordstrom partnership (Topshop concession in-store).

"In our view, this is a sensible acquisition from Asos that harnesses its already existing Topshop relationship and cements the brands for its core customer. Under the Asos umbrella, there is a global opportunity to grow these four brands with a higher gross margin opportunity, than a wholesale one previously. We have highlighted how having raised additional cash on the balance sheet back in the spring, we are now seeing the stronger retailers deploying this capital through targeted M&A and the platforms brands starting to scale.

"Whilst not without execution risk we believe that the former jewel in the crown of the Arcadia stable can thrive and prosper as Asos looks to leverage the Topshop brand globally."

Elliott Jacobs, EMEA commerce consulting director at LiveArea:
"The Arcadia acquisitions show the redistribution of retail power, which now sits firmly with digitally native brands.

"The latest deal is in keeping with the pandemic's recent acquisitions, an online giant taking a former high street powerhouse. Asos is the obvious choice of buyer for a number of reasons. Primarily, it is already one of the biggest wholesalers for the brands it has acquired, and picking up Topshop, Topman, Miss Selfridge and HIIT will allow it to further diversity its portfolio of online offerings.

"With Boohoo expected to pick up Arcadia's remaining brands, it's clear to all that digital is the key to retail. Digital natives are reaping the rewards of the agility that comes from digital investments. Both Asos and Boohoo are on their way to becoming e-commerce superpowers as they consolidate their positions in the new market. Only by investing in online capabilities will companies be able to adapt to, and predict market changes – companies that don't make the right investments will not stand the test of time."

Aneesha Sherman, analyst at Bernstein Research:
"This move is a market-share land grab, part of the sector-wide share consolidation that we expect to see play out in 2021, as cash-flush growth companies scoop up struggling legacy brands. With the customer base overlap and geographic overlap, Asos is hoping to deepen its share of the existing shopper's wallet, and secure some op-ex synergies to support margins medium-term."

Melissa Minkow, retail industry lead at CI&T:
"Asos buying Topshop, Topman and Miss Selfridge seems like a natural fit considering Asos already sells these brands, they have overlapping price points, and they share the same target consumer. 

"This acquisition wouldn't allow for the same reach extension that the Boohoo/Debenhams acquisition would because Asos and Topshop, Topman, and Miss Selfridge's have such identical target customers, but the brands could experience the digital reinvention they have needed via Asos. The online retailer could leverage its already-strong website and social media following to build more of a draw to its ranges with these brands.

"Asos will be able to leverage the brand heritage that comes with Topshop, Topman, and Miss Selfridge and establish a strong influencer strategy around the brand, much like what Revolve has done. That said, given that these brands already blend in so well with the Asos label and Asos has already been winning on its own, I don't think it's necessary to completely change its current strategy just because of this acquisition.

"Asos has always had a current pulse on its shoppers, and its site has been, and continues to be, a best practice platform. Digital-only and digital-first retailers often demonstrate a more flexible, comprehensive understanding of consumers' shopping behaviours because they can adapt more quickly than physical-first retailers. Thus, Asos and other successful e-commerce players are a sensible white knight for heritage high street giants."