Frasers special: How the retail giant dominated in 2023
As 2023 comes to a close and we reflect on the retail industry, there has certainly been one key player – Frasers Group.
The Michael Murray-led group has consistently made headlines throughout the year, whether it be for snapping up shares in Boohoo and ASOS or swooping in to 'rescue' failing businesses. While many businesses struggle to stay afloat during a struggling economy, Frasers is seemingly always there with a helping hand on doomsday.
The retail giant, which owns Sports Direct, House of Fraser and Flannels among others, took the cake in terms of the amount of acquisitions made this year, closely followed by high street giant NEXT. We've pretty much entered into a situation where, if a brand comes onto the market, if Frasers doesn't buy it, then NEXT does, and vice versa.
Formerly known as Sports Direct International, Frasers Group – under Murray and before him the redoubtable retail tycoon (and Murray's father in law) Mike Ashley – has been transformed. Once best known for its Sports Direct stores, which were functional at best, it now has an enviable portfolio of brands under its wing and, thanks to Murray's high energy 'elevation strategy', it has gained a reputation for creating some of the best-looking stores on the high street.
Here's our summary of a pivotal year for Frasers.
January
Frasers began 2023 as it intended to go in by increasing its stake in N Brown Group to 17.88%, becoming the company's second-largest shareholder. The move placed Frasers' stake behind Lord David Alliance, which acquired the group in 1968.
The news came after Frasers first purchased shares in N Brown in October 2022. It later increased its stake in the owner of Simply Be and JD Williams in November 2022.
Giulio Kingston upon Thames
February
March
Continuing on a roll, by March, the group had purchased The Mall in Luton for £58 million, further demonstrating its "ongoing investment and commitment to the long-term future of physical retail". Spanning 900,000 sq ft, The Mall in Luton is home to brands including Primark, H&M, TK Maxx, Boots and The Body Shop.
June
By June, Frasers Group had started to hover up shares in e-commerce fashion giant ASOS. Despite the online fashion giant's financial struggles, the group now owns a 22.7% stake.
Just days later, it purchased an 18.9% stake in online electrical retailer AO World, buying out shares held by Odey Asset Management for £75 million. Frasers is now the second-largest shareholder in AO World, behind Camelot Capital Partners and ahead of Roberts.
Boohoo
In the same month, the group purchased a 5% stake in fashion giant Boohoo. After continually snapping up more and more shares in the etailer over the following months, Frasers now owns 17.2% of the shares.
As Frasers Group, now run by Michael Murray, began snapping up Boohoo and ASOS shares, it enlisted Mike Ashley as a 'consultant'. That added fuel to speculations that Frasers Group had brought in its ex-boss to guide a potential online mega-merger with ASOS and Boohoo in the upcoming year.
Michael Murray insisted, however, that he has the authority on decision-making at Frasers Group, after taking the reins from his father-in-law Mike Ashley in May 2022.
The 34-year-old boss commented: "I’m the one making decisions at Frasers, not Mike Ashley. I’m on the board with non-executive directors, and we make the decisions. You’ve got to be on the board to make the final decision."
Missguided
October
Frasers aimed to increase its presence in Germany by buying the 34-store chain SportScheck winning the praise of Adidas chief Bjorn Gulden for the deal and for Murray's 'elevation strategy'. However by November the deal was off (for the time being) after SportsScheck filed for insolvency following the German retailer's parent Signa Holding filing for administration.
Frasers declared itself disappointed by the development but said it remained hopeful it could pick up SportScheck's assets out of administration. This could well be Frasers' last acquisition of 2023 or first of 2024 if it's plan goes off, but then again it has been linked to a another potential buy (see December below).
Also in October, Frasers proved that it didn't just buy businesses but was up for selling them too, offloading Missguided (which it had bought 18 months earlier) to Chinese fast fashion behemoth Shein. The move marked Shein's first UK acquisition but perhaps more interesting was Michael Murray's comment about the significance deal. "We are [...] excited about the ongoing discussions around further collaboration between Frasers Group and Shein," he said. What could that mean we wonder? Maybe 2024 will tell us.
December
Earlier this month Frasers continued with its run of acquiring premium fashion boutiques, confirming its acquisition of menswear retailer John Anthony for an undisclosed sum. Established in 1979, John Anthony is one of the longest-running independent men's fashion retailers in the UK.
Matches
But its spending spree didn't stop there; on Wednesday it acquired MATCHES from private equity firm Apax Partners in a £52 million deal. This was a bargain for the retail chain that was sold to Apax by its founders in 2017 for approximately £600 million to £800 million (the deal price at the time was not revealed).
Michael Murray took to LinkedIn commenting: "MATCHES has always been a leader in online luxury retail and has incredible relationships with its brand partners. This acquisition will strengthen Frasers' luxury offering, further deepening our relationships and accelerating our mission to provide consumers with access to the world's best brands. Whilst the global luxury environment is softer, we are confident that, by leveraging our industry-leading ecosystem, we will unlock synergies and drive profitable growth for MATCHES."
Frasers Group revealed earlier in December that its revenues were up by 4.4% in the six months to 29 October to almost £2.8 billion. However, it sounded a cautious note about the short to medium-term prospects of the luxury market, which has shown signs of softening on a global scale.
Despite slowing demand for luxury, this may not be the last we've seen of Frasers Group's deals in this space in 2023. It is speculated that Browns is next on its shopping list.
Industry rumours suggest that the group would be the most likely buyer for the storied London fashion boutique, which is likely to be sold following the recent rescue of its owner Farfetch by South Korean retail giant Coupang. Coupang is unlikely to be interested in retaining Farfetch's non-core businesses, of which Browns is one and naturally Frasers is seen as the main name in the frame to snap it up (though NEXT was reportedly interested in MATCHES, so there's a chance it may be interested too).
The industry now awaits to see if Frasers can land yet another luxury fashion jewel to add to it crown and is eager to understand how it will incorporate newly acquired MATCHES into its group. Murmurs stirred among peers raise concern that the fashion giant will turn MATCHES into its luxury mega-store chain Flannels and in doing so will lose its edgier, curated mix of unknown and upcoming designer labels.
One thing we do know is 2024 is primed to be another vintage one for British retail's most intriguing and acquisitive group.
