Asos sells Topshop stake for £135m to help repay debts
Asos has sold a majority stake in Topshop for £135m in a deal that will help it repay debts as fashion retailers struggle after a soggy summer and amid heavy competition.
The online fashion seller said it had sold a 75% stake in Topshop, the group which it bought just over three years ago for £330m, to Heartland, an arm of Bestseller, the Danish fashion business controlled by the major Asos shareholder Anders Povlsen.
Povlsen, a Danish billionaire who is Scotland’s biggest landowner, already owns brands including Jack & Jones and Vero Moda via his Bestseller business.
Topshop, which had 70 stores, fell into administration in late 2020 as part of the collapse of Sir Philip Green’s Arcadia empire. It was relaunched selling online only the following year by Asos.
Shares in Asos shot up more than 13% on Thursday morning after it announced the deal. The company will continue to sell Topshop and Topman items on its website but will now pay a royalty fee, which it said would dent profits by between £10m and £20m a year.
Asos will meanwhile reduce its net debts by £150m by issuing £250m in new bonds and buying back existing ones in a deal which analysts at Panmure Liberum said would “alleviate some of the short-term concerns around the company’s debt position”.
Jose Antonio Ramos Calamonte, the chief executive of Asos, said the move would help “accelerate our strategy to both offer customers the best and most relevant product and to turn Asos into a company that delivers sustainable, profitable growth”.
The online fashion seller has been struggling to turn around the business, selling off piles of unwanted stock and attempting to improve its fashion credentials as shoppers have swung back to the high street after a boom in online shopping during the pandemic.
Nick Bubb, an independent retail analyst, said that Mike Ashley, the founder of Sports Direct whose Frasers Group owns House of Fraser and Flannels as well as a large stake in Asos, “may not be best pleased” to see another major shareholder, Heartland, take the controlling stake in Topshop “following an initial unsolicited offer and a competitive sale process”.
Separately on Thursday, clothing retailer Primark warned shareholders that comparable sales at the clothing chain have fallen in the last six months.
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It said sales are expected to decrease by about 0.5% in the six months to 14 September, driven by a 0.9% decline in the last three months.
The retailer’s owner, Associated British Foods, said: “This primarily reflects unfavourable weather in the UK and Ireland… which resulted in lower footfall and particularly impacted sales of our seasonal lines in womenswear and footwear.”