On December 20, Frasers Group, the retail group owned by Mike Ashley, a successful British high street business, will acquire the luxury e-commerce site Matchesfashion for just 52 million pounds ($63 million).
According to Sky News, Frasers is believed to have beaten off competition from British retailer Next, which submitted an offer to acquire the business. The deal also includes the refinancing of approximately 20 million pounds of Matchesfashion’s debt.
Matchesfashion was once a fast-growing luxury e-commerce site and it still carries more than 450 brands and does business in 150 countries.
Since its sale to Apax Partners in 2017, however, the company has struggled to balance profitability with the complex challenges of attracting new clients and scaling its business, with losses increasing each year. Further spurred by multiple management changes, an unexpected pandemic, and the structural decline of the wholesale model, the company struggled until the arrival last year of Nick Beighton, the current chief executive officer of Matchesfashion.
Bayton will remain with the company after the acquisition and “working closely with the Frasers team to develop a strategy to successfully build on the underlying strength of the business whilst rapidly unlocking synergies,” the companies said in a statement.
Frasers Chief Executive Officer Michael Murray said that the acquisition will strengthen Frasers’ luxury offering, further deepening their relationships and accelerating its mission to provide consumers with access to the world’s best brands. “Whilst the global luxury environment is softer, we are confident that by leveraging our industry-leading ecosystem we will unlock synergies and drive profitable growth for Matches,” he added in the statement.
Sales in the luxury sector have experienced a global stagnation in recent years, which has been further exacerbated by the increasing borrowing costs. This has had a significant impact on all retailers operating within this industry.
This Monday, Farfetch narrowly avoided bankruptcy by selling to Coupang, a major South Korean e-commerce company. Similarly, Richemont’s Yoox Net-a-Porter is in a state of uncertainty about its future after its loss-making merger deal with Farfetch collapsed.