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Frasers confirms ASOS stake purchase and snaps up more shares in Hugo Boss

Lauretta Roberts
24 October 2022

Frasers Group has confirmed reports from this weekend that it had acquired a 5.1% stake in online young fashion giant ASOS and has also snapped up more shares in Hugo Boss.

Mike Ashley’s retail empire, which is now run by his son in law Michael Murray, is now the fourth largest shareholder in ASOS behind Danish billionaire and Bestseller owner Anders Holch Povlsen (26%), Camelot Capital Partners (11%) and T Rowe Price (10%). Schroders holds just under 5% and is now the fifth largest shareholder behind Frasers.

It is understood that Frasers has been taking advantage of the slump in ASOS shares over the past year and has been quietly building its stake and was obliged to inform that markets after that stake exceeded 5%, which it did on Friday.

The announcement comes days after ASOS revealed an annual loss of £32 million on sales up just 1% at £3.94 billion in the year to 31 August 2022.

On Monday, Frasers also told investors that it has increased its investment in German luxury fashion house Hugo Boss.

Frasers said it now has a maximum exposure to Hugo Boss of about £840 million, increasing from the £770 million exposure it reported in June.

The investment sees Frasers own 4.3% of Hugo Boss shares, while it also has a 28.5% interest via put options.

Put options are contracts which allow the owner the right to sell the asset at a future date for a previously agreed price. Put options, unlike normal shares, do not contribute to owning a majority stake or gaining voting rights at a business.

Nevertheless, the latest increased investment has given Frasers a 32.8% interest in the German firm, up from 30.9%.

“The strategic investments Frasers Group makes offer new opportunities for the company, whilst also helping to support the long-term future of the existing retail businesses, and the many thousands of jobs they sustain,” the company said.

“Frasers Group has extensive ambitions to grow the business inside and outside of the UK and is constantly exploring the potential for further expansion.”

Frasers doesn't always buy up shares with an intention to make an offer for a business (for instance it owns a sizeable chunk of Mulberry shares but says it does not intend to buy the business), it often does so to ensure favourable supply of brands into its stores, which include mutibrand retailers House of Fraser and Flannels.

It is believed that this may be motivation behind the building up of a stake in ASOS, which also owns the Topshop brand, acquired from the collapsed Arcadia Group. Frasers had been one of the interested parties in acquiring Topshop, but was beaten to it by ASOS.

Nonetheless Frasers is acquisitive and is currently in the process of trying to convince shareholders of Australian fashion market place to accept its offer having amassed a near 60% stake in the London-listed business.

In addition, earlier this year Frasers made a meaningful move into the fast fashion space acquiring online retailer Missguided out of administration for £20 million.

Hugo Boss

Strategic stakes: Frasers shareholdings

Debenhams: Frasers held a near 30% stake in the department store before its collapse and lost out in the race to acquire the business to Boohoo Group, which now operates its as an online-only entity

French Connection: Frasers held a near 25% stake in French Connection before selling all of its shares in February 2021 to Apinder Singh Ghura, who went on to buy the retailer through his MIP Holdings vehicle.

Hugo Boss: Frasers has been steadily building a "strategic stake" in the German luxury fashion house and now owns a 32.8% interest via a combination of shares and put options.

Mulberry:Frasers holds a more than 30% in luxury brand Mulberry, though it has said it has no plans to make a bid (Mulberry is already majority own by Challice, the investment vehicle for Singapore’s Ong Family, which owns around 56%).

MySale Group: At the moment it is trying to encourage shareholders of Australia's fashion marketplace MySale Group to accept its bid for the business and has built up a near 60% stake in the London-listed business.

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