Little more than a week after snapping up U.K. online fast fashion brand Missguided, Chinese powerhouse Shein could be back in the market again.
This time it reportedly has another British brand – the former jewel in the crown of the now defunct Arcadia group – in its sights, although it seems set to face fierce competition from two insatiable brand acquirers, one from the U.S. and one from the U.K.
Online fast fashion retailer Asos is understood to be considering the sale of Topshop less than three years after it bought the retail chain from Phillip Green’s collapsed Arcadia empire, as it seeks to stem growing losses.
Asos bought Topshop, which had established a U.S. presence during Green’s tenure, plus sister brands including Topman and Miss Selfridges, for around $325 million in 2021 as Green’s Arcadia empire crumbled.
At the time Asos beat competition from the likes of U.K. fashion bellwether Next and a reported interest from Shein to stage what looked like a coup, with the online retailer basking in soaring sales during the pandemic.
However, sales have been in decline since and on Nov. 1 Asos warned that sales appear set to continue to fall by as much as 15% in the year ahead after its delayed results revealed annual losses just shy of $370 million.
With net debt including leases now nearing $800 million, up from $655 million a year prior, analysts raised concerns that the online fashion retailer would need to find new cash – potentially through the sale of its Topshop brand – and the latest rumors have seen its stock price tick up around 6%.
However, that’s still over 40% off its stock value a year ago and at its results announcement Asos conceded that it also planned to sell or mothball its fulfillment center in Lichfield, Staffordshire later next year as part of a cost-cutting exercise.
Shein Targets Topshop
So, if it does make a bid, who are Shein’s may contenders for the coveted Topshop brand?
Unsurprisingly a raft of high-profile brands have been touted as possible suitors for Topshop, the most obvious domestic prospect being Mike Ashley’s Frasers Group, which has gained a reputation for snapping up distressed retail businesses to add to its retail empire.
Ironically, it was Frasers Group that sold Missguided to Shein last month, although it retained the real estate assets and people, which it had already integrated into its main retail division.
Not only that but the Sports Direct owner has been steadily building its stake in Asos over the past few months, with it holding now sitting at over 10%.
The other top name in the frame is Authentic Brands Group (ABG), which recently acquired quintessential British fashion brand Ted Baker, and is also part of the complex agreement that has seen Shein team up with Forever 21, ABG and mall giant Simon Properties.
ABG had an attempt to buy the Topshop business rebutted in 2020 and local media reports have speculated that the group’s Canadian owner, Jamie Salter, could see a fresh deal as an opportunity to go into head-to-head competition with Frasers Group, with both accumulating fashion, sports and athleisure brands.
Salter has been voraciously picking up struggling retail and consumer brand businesses and has built up a formidable portfolio of companies, including sportswear brand Reebok which it acquired last year.
That Shein, ABG and Frasers Group are so entwined makes for a fascinating and likely twisting tale of potential frenemies in a reshaping of the international fashion sector.
What is clear is that Shein has the financial muscle and the motivation to buy Topshop, a powerhouse brand before Arcadia’s acrimonious and controversial demise.
It could also be another step in realigning Shein’s global image after the Chinese retailer has been on a charm offensive to recalibrate views over its environmental impact ahead of an endlessly predicted listing on the New York Stock Exchange.
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