LONDON: Online clothing retailer ASOS bought Monday brands including Topshop from collapsed Arcadia but has snubbed its stores, resulting in around 2,500 job losses. ASOS, which has enjoyed strong demand during the pandemic, also clinched the purchase the Topman, Miss Selfridge and HIIT brands in a transaction worth £330 million ($452 million, 372 million euros), administrator Deloitte said in a statement.
ASOS' website-based business model already sells Arcadia's key brands. Arcadia collapsed late last year capped a spectacular fall from grace for owner Philip Green. He was once dubbed "the king of the high street" but saw his reputation damaged by the high-profile collapse of UK department store chain BHS in 2016.
'Fallen kingdom'
"After much speculation, ASOS has won the prized assets from the fallen kingdom of Arcadia," said Russ Mould, investment director at stockbroker AJ Bell. "This looks like a decent deal and one that gives ASOS the ability to earn higher margins from clothes that it was already selling through its platform under a previous partnership deal."
The announcement comes after rival online retailer Boohoo on Friday said it was in talks with Arcadia's administrator to buy three of its other brands-Dorothy Perkins, Wallis and Burton. Boohoo last week agreed to purchase the intellectual property assets of failed department store chain Debenhams.
Arcadia and Debenhams collapsed in December-costing up to 25,000 jobs-having struggled to transition from a bricks-and-mortar business, long before the coronavirus pandemic forced shoppers online. ASOS yesterday said its deal did not include the 70 retail stores that are attached to the brands it is purchasing. Those outlets will therefore close, resulting in around 2,500 job cuts.
"The downside of ASOS's actions is the large number of people working for Arcadia who will now become unemployed as stores are shut," added Mould. "It is only keeping approximately 300 staff, which is only a fraction of the number who worked for the brands being acquired. "It means the high street is left with even more vacant stores, and names strong enough to keep standing, such as Zara and H&M, are left in an even stronger position." ASOS is paying £265 million for the four brands, plus £65 million for current and pre-ordered stock.
Retail landscape redrawn
Britain's retail landscape has been dramatically redrawn by pandemic lockdowns that have increasingly forced consumers to shop online from the safety of their own homes. That has handed a major boost to online businesses which are not burdened by the cost of physical high-street stores-enabling ASOS and others to chase rapid expansion.
"Online retailers... are certainly taking advantage of the current challenging operating environment for physical retailers (to) take the opportunity to broaden their portfolios," noted analyst Maria Bogdanova at research consultancy Euromonitor International. ASOS said the "iconic" Arcadia brands it is gaining would "resonate" with its youthful customer base. "This acquisition represents a compelling strategic opportunity in support of our mission to become the number one destination for fashion loving 20-somethings worldwide." - AFP