Frasers Group has defended its controversial approach to buying and restructuring struggling retailers following criticism over the rapid collapse of MatchesFashion.
The retail giant, owned by Mike Ashley, has faced mounting scrutiny over its use of insolvency deals to snap up distressed businesses – including Matches – before swiftly placing them into administration.
Critics argue the tactic amounts to asset-stripping, allowing Frasers to retain valuable intellectual property while avoiding liabilities such as debt, leases, stock and employee costs. But others suggest the business is one of the few still attempting to revive parts of the struggling high street.
Frasers’ chief financial officer Chris Wootton branded the criticism “unfair”.
“A lot of what we acquire is very, very distressed businesses that are bankrupt,” he told the Times. “Without us saving them there has to be efficiencies found because … that’s why they went into bankruptcy in the first place.
“We feel we can turn these businesses around and make them successful by bringing them into the Frasers Group ecosystem. We’re very good at it and we’ve done it multiple, multiple times.”
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Frasers has grown into a sprawling retail empire through bargain acquisitions, snapping up the likes of House of Fraser, Missguided, Jack Wills, Evans Cycles and Sofa.com – though some have later been liquidated or restructured.
The Matches deal sparked particular concern due to its timing. Frasers bought the luxury fashion retailer’s brand name and IP in a pre-pack deal worth £19m last April, just a month after it was placed into administration. The deal excluded £80m of stock and 250 remaining staff, with Frasers stating at the time that “too much” would be required to save it.
Nick Beighton, former CEO of Matches, labelled the decision “unnecessary”, insisting the business could have been turned around. The transaction drew backlash from brands, creditors and employees.
Wootton defended the move: “Matches was a massively lossmaking business [and it] went into bankruptcy. We went in with our eyes open that it was going to be difficult to turn around and it proved to be. It wasn’t like we went in with our eyes closed. We knew what would happen and ultimately we took a very quick decision to put it back into administration because we didn’t feel we could, you know, turn it around successfully.”
He adds that Frasers is continuing to assess further takeover opportunities as it looks to expand its retail footprint.
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