Frasers Group has become the largest single shareholder in the online fashion retail group Boohoo after another share purchase.

The British fashion conglomerate now holds a 13.4% stake in the Manchester-based group, up from its 10.4% share earlier this year.

As well as the Boohoo and Boohoo Man sites, the Boohoo Group also includes PrettyLittleThing, Karen Millen, Nasty Gal and Misspap.

Since 2021, Boohoo has also owned the Debenhams brand and online marketplace after the former department store collapsed. The same year, Boohoo also purchased former Arcadia brands Burton, Wallis and Dorothy Perkins.

Inside the deal

Back in June 2023, when Frasers Group first purchased shares in Boohoo, it said: “Boohoo is an attractive proposition to us with its laser focus on young female customers”. It initially purchased a 5% stake in the group.

Frasers Group added: “We see potential synergies and an opportunity to strengthen our own brand proposition in collaboration with Boohoo, most obviously with Frasers Group brands I Saw It First and Missguided.”

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Frasers Group has gradually been increasing its share of the Boohoo group ever since with upped stakes being placed in July and again in September.

While Frasers Group is now the largest single shareholder, Boohoo co-founders Carol Kane and Mahmud Kamani, alongside members of the Kamani family, still own around 25% of the business between them.

Frasers Group is spreading its bets when it comes to online fast fashion brand investments. It purchased I Saw it First from Boohoo in July 2022 and Missguided last June, which it purchased for £20m after the online retailer went into administration.

This year has also seen Frasers Group purchase shares in online fashion giant Asos with the company increasing its stake from 5% to 7.5% in June 2023.

Here’s why the deal matters

Recent months have seen a number of online-only fashion brands struggling as consumers gradually move back into physical stores after the pandemic and cut back on unnecessary spending during the cost-of-living crisis.

Earlier this month, Boohoo warned that its full-year sales could fall by as much as 17% as a result of cash-strapped customers tightening their belts. In the six months to August 2023, UK revenues for the group fell 19%, despite discounting on the sites.

In May 2023, Boohoo was reported to have demanded a discount from suppliers of between 10 and 20%, in a bid to cut costs.

However GlobalData associate apparel analyst Alice Price believes Frasers Group is being “strategic” with its continued investment and that, despite the recent downturn for many brands, the UK’s online apparel sector is expected to grow 12.7% between 2023 and 2027.

“The fashion heavyweight is continuing to take advantage of the drop in share prices amid lacklustre results,” Price says. “For instance, Boohoo reported a decline in revenue of 17.4% in the six months ending 31 August 2023, while retailer ASOS saw sales decline by 10% in the year to 3 September 2023. Despite these unfavourable results, these pureplays still remain well ahead of pre-pandemic levels, so Frasers Group’s investments should turn out to be beneficial.”

Key takeaways for the fashion industry

GlobalData’s Price says that this further investment in the Boohoo group suggests that Frasers “is positioning itself to assert further influence in the UK pureplay sector”.

Since the pandemic, UK consumers have continued to shop online, even after restrictions have lifted. In July 2023, 27.4% of all retail sales took place online, with 11p of every £1 spent online in the country spent at textile, clothing and footwear retailers.

This latest investment suggests that Frasers Group sees the current downturn as temporary, as the UK apparel market moves more permanently online.

Since September 2023, there have been rumours that Frasers Group is planning to offload its Missguided brand with a sale to Shein, which would also mark a strategic move for the Chinese fast fashion company.

At the time, Price noted that Frasers Group was “yet to turn around the brand since acquiring it back in May 2022”. She added: “Under Shein’s wing, flailing Missguided would benefit from the giant’s unrivalled influence and financial resources to help steer the brand back to relevance, and enable Shein to further standout against the likes of Boohoo and ASOS.”

Our signals coverage is powered by GlobalData’s Thematic Engine, which tags millions of data items across six alternative datasets — patents, jobs, deals, company filings, social media mentions and news — to themes, sectors and companies. These signals enhance our predictive capabilities, helping us to identify the most disruptive threats across each of the sectors we cover and the companies best placed to succeed.