Online retailer Asos has sold a majority stake in Topshop and Topman in a new joint venture deal with Heartland, the holding company representing the interests of the Holch Povlsen family and their family business Bestseller.
The joint venture will grant Asos “certain design and distribution rights” for the Topshop and Topman brands in return for a royalty fee to allow it to continue selling the brands online.
Following the transaction, set to complete in Q4 2024, Heartland will own a 75 percent stake in the joint venture, worth 135 million pounds, while Asos Holding Ltd will hold the remaining 25 percent. Asos will also have the right to sell a further 5 percent interest in the joint venture to the Heartland shareholder for 9 million pounds.
The move will ensure that Asos can continue to sell Topshop and Topman branded products on its e-commerce website while allowing it to “focus on allocating capital more efficiently” to accelerate its ‘Back to Fashion’ strategy.
Asos said the deal is expected to have a 10-to-20-million-pound negative impact on EBITDA for FY25 but will be “increasingly EBITDA accretive over time”.
Asos to relaunch Topshop.com and expand reach through wholesale
As part of the deal, Asos added that it intends to relaunch Topshop.com within six months of completion and that the joint venture can expand Topshop and Topman’s customer reach through selected wholesale partners – both online and offline.
In addition, Asos announced an amendment and extension of its existing facilities agreement with Bantry Bay Capital to May 2027 with an option for a 12-month extension.
José Antonio Ramos Calamonte, chief executive officer at Asos, said in a statement: “We’re pleased to be making this announcement today which is an important step in Asos’ continued transformation. The joint venture and the launch of the refinancing will accelerate our strategy to both offer customers the best and most relevant product and to turn Asos into a company that delivers sustainable, profitable growth.
“Topshop and Topman have made good progress since we acquired the brands in 2021. The new JV with Heartland is testament to the brands’ potential and the partnership will help bring Topshop and Topman to more customers globally. Asos will continue to focus on what we do best – designing the best fashion and providing a destination for style. Through the Joint Venture, new opportunities, both online and offline, can be explored and we are excited to continue to be part of the brands’ future while also realising the best value structure for Asos shareholders today.”
Lise Kaae, chief executive officer at Heartland, added: “We are pleased to enter into this joint venture with Asos, bringing the best of the Topshop and Topman brands to customers globally, while supporting Asos’ strategy to obtain a more efficient capital allocation. We are committed to and look forward to working closely with our partners in a strong alliance.”
Asos also revealed that it has made “good progress” on its ‘Back to Fashion’ strategy, focused on bringing the best fashion and most inspirational experience to its twenty-something fashion-loving customers and delivering sustainable, profitable growth in its FY24 trading update.
For FY24, Asos expects adjusted EBITDA at the top end of consensus estimates, sales slightly below guidance, with all other guidance as set at FY23 year-end remaining unchanged, subject to the impact of this latest transaction. A full update on its strategy and financial guidance will be given at its full-year results announcement in the coming months.