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Matches: What went wrong for the luxury retailer and what does the future hold? Team
25 March 2024

Reaction to the news that Frasers had appointed administrators to take leadership of its recent acquisition – the luxury multi-brand retailer Matches – has been varied. Some industry insiders were "unsurprised" while others were "shocked" and "gutted". Whether the move came as a surprise or not, the overall sense is one of deflation and concern about the future of luxury multi-brand retail.

The fact that luxury worldwide has been challenging lately is widely known. Farfetch all but collapsed before Christmas and had to be rescued by a $500 million deal by Korea's Coupang, which led to the exit of its founder José Neves, and a fall-off in demand from the once dependable Chinese consumer has hit major luxury conglomerates.

But the fall of Matches hit hard. It was a true home-grown success beginning life in one boutique in London and going on to become a globally renowned name and tastemaker in fashion.

Matches was founded 35 years ago by Tom and Ruth Chapman, a husband and wife team with impeccable taste and an obsessive attention to detail. The Chapmans extended their retail empire from Wimbledon to other well-heeled London neighbourhoods, such as Richmond upon Thames, Notting Hill, Marylebone and Mayfair. At one point they even operated stores in London for global brands such as Diane Von Furstenberg and Max Mara, such was their strategic importance.

In 2007 it entered the world of online and, so the story goes, its stock sold out in a matter of days. Its marbled delivery boxes became almost as coveted as their contents and Tom and Ruth were bona fide fashion royalty (though they were always low key and avoided splashy interviews in the press and posing on red carpets).

Tom Chapman Matches

Tom Chapman pictured in Matches heyday in 2007 (Alamy)

The pair decided to take a back seat from the business in mid-2010s, appointing Ulric Jerome as CEO, and the business was put up for sale. It was purchased bye private equity house Apax in 2017 in a deal that reportedly valued it at a cool $1 billion. And that's really when the trouble began.

Even though Matches was successful that price was full to say the least and, according to retail industry expert and analyst Richard Hyman, will have deterred Apax from investing further into the business to maintain its high standards and to power further growth.

"They sold on an astronomically high valuation, totally outside any commercial reality. And from there the only way was down. When purchasers discover they have overpaid, they become rather less inclined to invest further, and all businesses need constant investment," Hyman said.

There was also no stability at the top of the business following the Apax deal. CEO Ulric Jerome departed in 2019 and was replaced in 2020 by Ajay Kavan, a former Amazon executive. After just one year in the role, Kavan was replaced by former Printemps executive Paolo De Cesare, who was gone by July 2022. He, in turn, was replaced by former ASOS CEO Nick Beighton, who is understood to have already left the business as part of the administration process. There were a host of other high-profile appointments and exits along the way.


Nick Beighton, former CEO of ASOS and Matches

While this revolving door was turning, the business was hit with the pandemic and a growing reluctance from luxury brands to work with third-party retailers, preferring instead to control their own distribution.

As a consequence, financial results deteriorated during the Apax ownership period and the company fell into a loss, closing retail stores in Richmond upon Thames and Notting Hill along the way. At the moment, Wimbledon, Marylebone and Mayfair remain open. For how long, we wait to see.

Given the turmoil. the downfall of Matches was expected by many, including Pan Philippou, a well-known fashion consultant and investor. Philippou, a former CEO of Ben Sherman, WDT and Diesel and now chairman of fashion start-up AWAN (As We Are Now), told "I saw this coming. Apax has short-term objectives. When the original owners, Tom and Ruth, owned the business, they knew their customers. They curated an aspirational offer that complemented the customer journey. They had a clear vision and ambience around the Matches brand. Unlike Apax, who sent mixed messages to their audience."

Flannels Frasers Group

Flannels, part of the Frasers Group

By 2023, Frasers Group, which also owns luxury super-boutique chain Flannels, acquired the dwindling business paying just £52 million, a signifiant discount on the price paid by Apax.

It is understood the Matches management team, led by Beighton, then submitted a turnaround plan to Frasers, which proved to be optimistic. Insiders say Frasers were keen to shift existing stock, while the Matches team wanted to invest in newness to keep customers engaged. This will have been challenging since brands were already backing off from the business in light of the acquisition and requests for retrospective discounts on stock already supplied (and, in some cases, sold).

As such the turnaround plan was given little time to come into effect and, ultimately, failed. On 8 March, in a statement to the London Stock Exchange, Frasers said that since they acquired the retailer, "the business has consistently missed its business plan targets... Whilst Matches' management team has tried to try to find a way to stabilise the business, it has become clear that too much change would be required to restructure it, and the continued funding requirements would be far more than amounts that the Group considers to be viable."

In light of this, Frasers said, the management team at Matches had decided to call in administrators from Teneo. Half of the business's staff (around 300) were laid off. For now, the business continues to trade. For how long, remains to be seen.

According to Hyman, the fate of Matches (whatever it ultimately ends up being) is a salutary tale in the perils of riding a wave and not focusing sufficiently on the underlying business. "Many online retail businesses have been shown to rely too heavily on a growing market. The slowdown in online sales growth has revealed weaknesses in so many models both high-end and value – Asos, Boohoo, Net-a-Porter and of course, Matches," he said.

When Matches forayed into online retail, luxury fashion wasn't so accessible online and brands had unsophisticated e-commerce operations (if they had it all). Now any multi-brand retailer will find themselves competing not only with others like them (often with a very similar brand assortment) but global luxury powerhouses as well.

Hyman added: "These days, brands can go direct and increasingly are doing exactly that. So you need to be so much better at curating a collection of brands where the sum is greater than the parts. Doing this in a store is hard but doing it online, where the experience tends to be dumbed down, is even harder."

One industry insider corroborated this: "Sadly, within the UK, all retailers feel they need these global labels which means they are big fish in a very small pond – unless they can sell internationally, which is extremely hard unless they expand themselves into different countries either with a concrete footprint or online marketing, they are having to fight for market share against the brands they are buying from!"


Mytheresa: achieving sales growth

One such retailer that seems to have found the right formula is German-based Mytheresa, which recently revealed sales growth of 8.3% in its last quarter of trading. Mytheresa fixates on high spending clients, offering a premium and personalised service, and has avoided aspirational spenders who are more likely to be affected by the global economic challenges. Insiders tell us, its boss, Michael Kliger, prides himself on running a "boring" business, which is to say he is laser focused on business fundamentals and not swayed by the glamour.

There are question marks over others in the space, however. Before its own nervous breakdown, Farfetch was due to acquire a 47.5% stake in YNAP (parent of Net-A-Porter, Mr Porter and The Outnet) from luxury conglomerate Richemont. That deal was halted as a result of Farfetch's acquisition by Coupang. Could those businesses now benefit from the troubles at Matches, one of their biggest rivals? Industry watchers are not convinced.

Another insider commented: "I am not sure if the current customer who shops with them has an emotional connection to them. Established luxury indies, who have a great connection and loyalty in their local community – coupled with laser-focused personnel service – can still flourish, adding vintage, furniture, art into their offer, to keep them fresh and interesting."

So could it be, that the demise of the multi-brand giants could offer the opportunity for well-curated local independents (much like the one Tom and Ruth Chapman established 35 years ago) to emerge from all of this?

Aron Sharpe, CEO of Options Fashion Distribution, which supplies UK fashion independents, believes so and is urging them to take advantage. "This absolutely opens the door for smaller companies to capitalise... Independents will start to appear again after being pushed aside. I also think it is a great time for artisan products and independent companies to make a comeback," said Sharpe.

Will Matches make a come-back though? That's not an easy question to answer right now. While it holds a dear place in the hearts of its customers, it has burnt bridges with brands. Many of them remain unpaid and have no idea whether, following the administration process, they ever will be.

It had been assumed that Frasers would buy it back out of administration when it is shorn of its debts but the longer the process goes on, the less likely that seems. While it would end up with a smaller, cleaner business, which brands would want to supply it? Surely not those who have not been paid?

While this process has been painful for Frasers, it can well afford the £52 million hit and it does pave the way for its super-boutique chain Flannels to be even more dominant than it already is.

As an insider was left pondering: "Does Matches have a future? Will it not be consumed inside Flannels? This means the brands that weren't already in Flannels have a decision to make."

Reporting: Chloe Burney, Tom Bottomley

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