ASOS reportedly exploring Topshop sale: who would buy?

ASOS is considering selling Topshop as its turnaround drive continues, at least that’s what a report claimed at the weekend, although ASOS is taking a “no comment” stance.

Sky News said it’s in the early stages of the process and there’s no certainty that a sale will actually happen. It’s also unclear how much the brand might be worth at present and whether any talks with potential buyers have yet taken place. 

ASOS bought Topshop in the wake of the Arcadia failure in early 2021, along with Topman, Miss Selfridge and HIIT. The company paid £265 million for the four brands, plus £30 million for the stock, but didn’t take on the stores so the label became online-only. It said at the time that it was a “strategically compelling opportunity to acquire strong, iconic fashion brands resonating with our core customer base”. 

It followed that up by striking a deal for Nordstrom to sell the brand with the American retailer taking “a minority interest in the Topshop, Topman, Miss Selfridge and HIIT brands to help drive their growth”.

The most intriguing thing is who might buy the business if it is eventually sold.

Bidders who were interested in late 2020 will clearly be expected to take part. They include Next — the new owner of FatFace and the majority owner of Reiss and Joules — that has been hugely acquisitive in recent periods. Also on the list might be Authentic Brands Group, which has recently bought other UK assets including Ted Baker and Hunter.

JD Sports was interested last time too, with talk that it was linking with Authentic on a bid.

And then there’s Boohoo Group, which was snapping up brands back then, although it’s faced many of the same problems as ASOS lately and would be a less likely candidate now. Shein was also rumoured to be interested in 2020 and M&S has been an active buyer of brands in recent years. Nordstrom would have to be taken into account too.

And of course, we can’t leave out Frasers Group. It’s a serial acquirer of brands, although it’s known to favour buying them cheaply, which could be an issue if ASOS wants a premium price for what’s a major UK name. But Frasers is a big shareholder in ASOS itself, which may or may not be significant. There’s been talk that its stake-building in both ASOS and Boohoo might be connected to an eventual bid or an attempt to merge them.

What’s most intriguing is that some of these potential bidders operate physical stores, raising the prospect of Topshop, Topman and maybe the other labels returning to the high street. That could happen either as part of a multibrand set-up or even via monobrand stores.

Would physical stores make sense though? Some of the problems e-tailers like ASOS and Boohoo have faced in the last 18 months or so is that consumers have returned more enthusiastically to in-person shopping than expected so a new owner opening Topshop stores wouldn’t be a shock. 

Indeed, the physical stores recovery has prompted some surprising developments, such as news last week that e-tailer The Range is going to open physical spaces for the Wilko brand it just acquired in an apparent online-only deal. And labels such as Monsoon and Jigsaw that previously closed stores have started opening them again.

But why would ASOS actually want to sell brands that it has owned for a very short time? It had seemed heavily committed to the business with it launching a “bold new visual identity” for Topshop and Topman around a year ago.

But the confidence it had during and immediately after the pandemic — when e-tailers were riding high — has ebbed away. The company has faced major challenges in recent periods, reporting losses, its share price plummeting and it resorting to raising new financing earlier this year.