Frasers Group has bought Missguided out of administration for £20million, beating off competition from Boohoo.
Retail consultant Graham Soult says: “I think everyone assumed that one of Missguided’s online rivals would swoop for it, but I’ve learned by now that Frasers Group should never be ruled out when there’s a failed retailer available.”
Frasers is a buyer with much experience in turning around brands, which could put it in good stead to get Missguided back on track.
Sean Moran, partner and restructuring specialist at law firm Shakespeare Martineau says: “The reported £20million price tag also indicates that it sees significant potential in the business.
“Frasers Group’s history of previous distressed acquisitions, and its ability to leverage value from iconic brands, such as Evans Cycles and House of Fraser, suggests it will make this purchase a success.”
Vernon Dennis, restructuring expert and partner at the law firm Howard Kennedy, concurs. “Frasers Group is one of few credible buyers in the retail space willing to take on distressed businesses, whether through utilising their existing store portfolio, or as here through online platforms.”
But what’s next for the fast fashion retailer under the ownership of Frasers Group?
Chief executive Michael Murray gave away very little when unveiling its new acquisition this morning. However, he did confirm Frasers Group would run Missguided as a stand-alone business and that the fast fashion firm would “benefit from the strength and scale of Fraser Group’s platform and our operational excellence”.
GlobalData apparel analyst Darcey Jupp says: “Operating Missguided as a stand-alone brand is a wise move, as its young target audience would not be inclined to shop at its other fascias like House of Fraser.
Jupp adds that the £20million purchase is a punt worth taking, “particularly if Frasers can leverage its operational scale to recapture Missguided’s young audience and make the brand competitive once again”.
She says it is vital for Frasers to strengthen Missguided’s core online proposition and ensure that its products are trend-led and competitively priced.
Fast fashion is a hugely competitive sector and Missguided has struggled to keep up with rivals such as Boohoo and InTheStyle, both in terms of nailing the right trends and low prices.
Keeping prices low is one area that Sports Direct is adept at. Missguided could benefit from this expertise along with the economies of scale that the Frasers Group – which includes businesses such Jack Wills, USC, House of Frasers as well as own brands like Lonsdale, LA Gear and USA Pro – enjoys.
Jupp believes the current economic environment could provide an opportunity for Missguided to capture young consumers who are being forced to trade down.
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Although Frasers Group intends to operate Missguided as a separate business, it tends to capitalise on cross-selling opportunities across its many brands.
This could mean bringing Missguided into the physical world again. The online retailer ventured into bricks-and-mortar with two stores in Westfield Stratford and Bluewater in 2016, however, less than three years later it shuttered both shops.
Soult says: “Through Frasers Group you’ve got potential to bring Missguided into stores like House of Fraser, and then potentially bring a younger or different demographic into those stores.”
He also says Missguided could be a good fit in Sports Direct stores, particularly its activewear and casualwear. “Frasers Group can bring greater exposure to the Missguided brand,” he says.
Although Frasers could be a good route to market for Missguided, Jupp believes Frasers Group should retain the etailer’s concessions in Asda stores, which she says are “a good way to capture demand from convenience-seeking consumers”.
What the acquisition means for Frasers Group?
While being part of the Frasers Group can bring much benefit to Missguided, the fashion etailer could also boost its new owner – particularly when it comes to growing its ecommerce business.
Murray says: “Missguided’s digital-first approach to the latest trends in women’s fashion will bring additional expertise to the wider Frasers Group.”
Soult explains: “Frasers have done a lot of successful things but arguably, one of the things that they aren’t so good at is online.”
“You don’t really think of House of Fraser or even Flannels or Sports Direct as being a real leader in online, so buying Missguided brings all that expertise into the mix.”
If Missguided can help grow Frasers Group’s online business, and Frasers can help Missguided find its competitive edge again, the acquisition could be win-win for both parties.