JD Sports reportedly eyeing buyout of fast fashion retailer Missguided

JD Sports is reported to be eyeing an investment in online fast fashion retailer Missguided, which could lead to a full take-over of the business.

According to Sky News, following Missguided chief Nitin Passi's decision to appoint advisers to investigate potential investors in the business, a number of interested parties have emerged including JD Sports.

Sources told the news broadcaster that talks had not reached the point of an imminent conclusion and that, while JD Sports seemed keen on taking a majority stake in Missguided, it wasn't clear if its founder Passi wanted to cede control.

Passi founded Missguided in Manchester in 2009 (around three years after larger rival Boohoo was also established in the city) when he was just 26.

Missguided has encountered challenges in recent years and a move into physical retail with its own standalone stores was reversed after it incurred heavy losses. However it recently concluded a deal with ASDA for its clothes to be sold in 100 of its stores and has also recently expanded into the growing beauty and home markets. Recent reports suggest the business could achieve sales of close to £400 million in the coming year.

It was revealed in April that Missguided had appointed Rothschild to advise on future options for the business and it was said that the sale of a stake could raise as much as £100 million.

At the time Passi said: “I’ve done this for 12 years without raising money. We’ve had some issues but they are now behind us and we’ve got our magic back.

“We can still grow this business as we are but we want to grow the business more aggressively. This [the search for an investor] is not for me to take money off the table, we want to put money into the business.”

A move from JD Sports to acquire Missguided ties in with its strategy to diversify beyond its core sports and outdoor markets. JD was one of the bidders in the mix to acquire Topshop from the collapsed Arcadia Group but lost out to ASOS.

The PLC has been highly acquisitive of late with larger buys focusing on international sports retailers such as the buy-outs of Spain's Deporvillage, MIG in Poland, and DTLR in the US in recent months. It has also acquired two high-end, multi-brand independent retailers in the form of Manchester's Oi Polloi and Wellgosh in Leicester.

Its acquisition of smaller sports retail rival Footasylum has been dogged with issues, however, as the Competition and Markets Authority (CMA) recently stood by its decision of last year to block the £90m buyout on the grounds it could lead to poorer choice for consumers. JD has disputed this decision.