Frasers increases shareholding in ASOS for the second time this week

Frasers Group has upped its shareholding in ASOS for the second time this week and now holds just under 10% of the shares in the online fashion giant.

The retail group, which owns House of Fraser, Flannels, Sports Direct, USC and more, revealed it had increased its shareholding to 8.8% on 6 June and today (8 June) has increased it further to 9.9%.

Frasers' further investment in ASOS shares follows news which was revealed at the weekend that Turkish fast-fashion retailer, Trendyol (which is backed by China's Alibaba), was eyeing up a potential £1 billion bid for ASOS. According to a report in The Sunday Times an approach was made before Christmas for the deal which would value ASOS shares at between £10 and £12 each (shares are currently trading at around 350p), but there were no live talks underway, hence neither party has been obliged to comment.

Prior to this Frasers had already amassed a 7.4% stake in ASOS and its shareholding in the business was first revealed last autumn when it was announced it had acquired a stake worth more than 5%.

Frasers is noted for holding what it calls "strategic stakes" in other businesses. It currently holds a more than 30% stake 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%). However Frasers is said to be agitating to gain representation on the Mulberry board.

In recent times it has been increasing its stake in German luxury house Hugo Boss but in fact trimmed its shareholding down to 3.9% in January of this year. It also has a 25% interest in Hugo Boss 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.

In the past Frasers held a near-30% stake in Debenhams before its demise (and the eventual acquisition of its IP and website by Boohoo Group) and held a near 25% stake in French Connection before selling all of its shares in February 2021.

ASOS recently revealed that it had raised £75 million via a share placement to help fund its turnaround strategy, dubbed 'Driving Change'. The etailer also secured a new long-term £275 million financing facility.

Last month ASOS reported its interim results showing that sales dropped 7% to £1.84 billion in the six months to 28 February 2023 while pre-tax losses widened to £290.9 million (2022: £15. 9 million).

The loss was in large part down to a write-off of £128.2 million worth of stock and £49.4 million of non-cash property impairments due to closure costs relating to the reduction is size of its HQ and logistics footprint.