Liz Moseley on the battle of the billionaires at the fast fashion behemoth
- Rufus Norris announced that he will be stepping down as artistic director of the National Theatre after ten years in the job.
- Eat, Pray, Love author Elizabeth Gilbert delayed the publication of her new novel set in Russia following a backlash from Ukrainian readers.
- Spotify ended its podcasting deal with the Duke and Duchess of Sussex
Fashion retailer Asos (pronounced ace-oss not ass-oss) has slumped out of the FTSE 250 as rumours of a potential takeover battle had fast fashionistas and City analysts reaching for the popcorn.
So what? The fashion industry is nothing if not savage. Just two years ago, at the height of the pandemic home shopping boom, Asos was valued at £7 billion. It’s now worth closer to £450 million.
Gladrags at dawn. Ever since its inception in 1999, “As Seen On Screen” seemed to have the 20-something shopping zeitgeist all sewn up. Unlike its competitors, Asos twigged that social media was its friend, mercilessly trampling competitors and the celebrity magazine market under its aggressively priced, on-trend slingbacks. Its formidably fast and fierce way to “get the look” made its iconic black and white plastic packages – same day delivery! free returns! – the scourge of office post rooms. As recently as 2021, it plucked the beloved Topshop brand from the ashes of Philip Green’s stricken Arcadia Group in a deal worth £330 million.
What went wrong? A cost of living crisis is any retailer’s nightmare, but there’s more to Asos’s woes. When founder and longtime CEO Nick Robertson stepped down in 2015, “the company lost some of its energy and maverick spirit” said Lauretta Roberts, editor-in-chief of TheIndustry.Fashion. “It might sound like flimflam, but when you’re selling to Gen-Z, they have to think you’re cool or you’re screwed.” The brand has been uncharacteristically slow to spot key shifts in its consumers’ behaviour.
- The closure of its in-house magazine in 2019 – the UK’s most read fashion quarterly – was a cost-cutting measure that trimmed Asos’s credibility as a thought leader in its market.
- Asos Marketplace failed to stitch up the booming preloved and resale sector, leaving space for the likes of achingly cool British site Depop, a wholly owned subsidiary of Etsy since 2021, to take $552 million in sales in 2022.
- Post-lockdown, young people ventured out shopping IRL but Asos missed the boat on that too. “The decision not to keep any of the Topshop real estate was a mistake,” said Roberts. “Even Boohoo is doing pop-ups.”
Inevitably, here comes Mike Ashley. The billionaire founder of Sports Direct is partial to an ailing retailer. His Frasers Group, which splurged £20 million rescuing pure play challenger Missguided from administration a year ago, upped its stake in Asos to 8.8 per cent in an attempt to block a potential takeover bid from Danish billionaire Anders Povlsen, the largest landowner in Scotland who also happens to be the biggest shareholder in Asos. Povlsen and Ashley are already squabbling over the defunct Edinburgh department store Jenners. Povlsen owns the building, Ashley owns the brand but they’ve not been able to agree a deal on keeping the two together. In the event of a takeover bid for Asos, Frasers would need a 10 per cent stake in the company to secure a seat at the table.
Trends can turn. Regardless of what happens with the ownership showdown, Asos’s new chief executive José Antonio Ramos Calamonte – formerly of Inditex, which owns Zara – is a man with a plan. Calamonte told investors this week that the company had returned to profit thanks to £200 million in cost savings, despite continued drops in sales, triggering a share price rally. Roberts is optimistic: “When he sorts out the business fundamentals, which he is doing, he needs to bring the confidence and cool back and I think he will.” It’s much too early to bin off Asos.
