Embattled fashion pureplay Asos has recently been at the centre of takeover talks following reports of a £1bn takeover bid by Turkish fast-fashion retailer Trendyol. Frasers Group also sparked speculation by increasing its stake in the fashion retailer three times in two weeks
Since reports of the interest from up-and-coming Trendyol emerged last month, nobody else has been linked with a purchase of Asos.
In its latest trading update last month, Asos updated the City on its turnaround strategy, with boss José Antonio Ramos Calamonte emphasising that its turnaround plans will not be an “instant fix”.
He added that necessary changes for Asos will “take some time” despite the retailer currently making progress.
While speculation regarding a takeover continues to rise, with a particular eye on Frasers Group, another retailer might just fit the bill to solve Asos’ problems.
Former Asos chief executive Nick Beighton called Nordstrom “the right partner” when the collaboration was first announced in July 2021. So would now be the right time for the US department store chain to take this partnership to another level – or are Frasers still first in line?
Extending the partnership
The initial partnerships involved Nordstrom investing for a minority interest in the Topshop, Topman, Miss Selfridge and HIIT brands, as well as Asos own-brand products.
This marked both the first time Asos had partnered with another retailer and the first time an edit of its brand would be sold in stores.
At the time, Nordstrom president and chief brand officer Pete Nordstrom told the City he was excited about the opportunity to work with the fashion brand.
“We could not have found a better partner in Asos, the world leader in fashion for the 20-something customer,” he said.
Nordstrom has continued enhancing its ecommerce efforts over the past few years, alongside its extensive bricks-and-mortar offering. Its online roster now includes a vast range of fashion brands such as River Island, & Other Stories and Scotch & Soda.
Shore Capital research analyst Eleonora Dani says a potential Asos bidder needs to be tuned into the online fashion retail space in order to make it a success.
“Nordstrom would make sense because Asos needs a business that knows how to engage with shoppers online and that itself has a strong online presence,” she says.
The wrong fit
Despite its expertise within the online fashion sphere, GlobalData retail managing director Neil Saunders questions whether a Nordstrom takeover would make any sense considering the conflicting demographic and the original partnership between the two being “underwhelming”.
“I think it makes sense from Asos’ point of view to be acquired; I think it would solve a lot of their issues and take a lot of heat off of them,” he says.
“I’m not quite sure that, from a Nordstrom point of view, it would make much sense to buy Asos. They have got a partnership together and that ticks some boxes, but I think there are a lot of negatives around an acquisition.
“If you think about Asos and what they could have done with it, and the fact that it just really isn’t very compelling, that’s one of the issues.
“Even if they did acquire it, they don’t know what to do with it or how to capitalise on the brand. I think Nordstrom wouldn’t really have much of a clue based on what it seems to have done to date with the partnership.”
Speaking about department stores more generally, Saunders says they may be the wrong fit for the likes of Asos as many are “not in a particularly good place” in the current climate and do not know how to retail pureplay brands properly.
He adds: “It is very difficult to see a department store, from a US perspective, taking over Asos. I also think a lot of department stores tend to be focused on older consumers, so I just don’t think Asos is necessarily a great fit for anyone in that space.”
While the initial Nordstrom and Asos partnership certainly had potential, the verdict from Saunders is that it wasn’t particularly focused or well executed.
Could Frasers take the lead?
At the end of last month, Frasers Group not only upped its stake in Asos three times, but it also acquired a 5% stake in online fashion retailer Boohoo in a continuing string of acquisitions.
A senior fashion retailer told Retail Week that a Nordstrom takeover is certainly a potential option, but questioned whether Mike Ashley’s retail empire might win the battle if it attempts to bring Boohoo and Asos together.
Saunders says Frasers is by far the more likely option for an Asos takeover because a lot of work is needed to make it a success and the department store group has recent experience in acquiring retailers, including fashion brands Missguided and I Saw It First.
“Frasers Group is a potential avenue just because they seem to be very acquisitive at the moment,” he says.
“You can see how it would integrate into the wider strategy at Frasers; they could give it a physical presence as well as drive online.
“You could see that as a route forward. I think it would be a more sensible route forward as there would be some synergy savings as they integrate them into the group.
“They’ve got their stake but whether they would want to spend the cash in doing a full acquisition remains to be seen because, again, they would inherit a lot of problems and issues.
“I think Frasers is a much more likely prospect than a player like Nordstrom. At least on the surface, it seems much more likely.”
Nordstrom may have been a good match for Asos when it endeavoured to break into the US, but the group may not be equipped for a full takeover – which puts Mike Ashley’s sprawling retail group back in the spotlight.
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