Missguided: Would Shein be unwise to snap up Frasers’ fashion gamble?

As well as Missguided, Frasers Group is also the owner of fast-fashion brands I Saw It First and Missy Empire, alongside its range of sports and lifestyle retailers such as Sports Direct, Flannels and House Of Fraser.

In a deal that would mark the first time Shein has acquired a British fashion brand, sources have reportedly said Frasers will retain its head office and staff currently working at the brand despite a deal having not yet been confirmed.

But why is Shein interested in Missguided? How does it fit into Shein’s brand portfolio? And what does this mean for Frasers?

Increasing interest

Shein reported annual revenue of $22.7bn (£18.8bn) last year and that’s expected to double by 2025, so it might seem odd that a juggernaut as enormous as Shein would be interested in a brand so much smaller. 

But Peel Hunt retail analyst John Stevenson says while Shein is already successful, Missguided could elevate its proposition further.

“Shein is doing phenomenally well, but could they use Missguided as a more elevated proposition? Possibly. You could argue that it doesn’t necessarily fit with the concept that Shein is trying to be everything to everybody and the scale of what they are doing, but it Missguided has a certain place in people’s minds in terms of the price points and the quality,” he says.

While Shein is showing an interest in the Missguided brand, Frasers has two other fast-fashion brands – I Saw It First and Missy Empire, though Shein doesn’t appear to have expressed an interest in either. 

The reason for this, according to Stevenson, could be that Missguided is the strongest fast-fashion brand under the Frasers umbrella and its international standing and relevance not only fits in with Shein but makes it the most obvious brand for Frasers to sell.

It’s something that the group may be motivated to do, given that Missguided remains somewhat at odds with Frasers’ broader focus on sports and premium lifestyle.

A short-lived partnership

While Shein might be a better fit for Missguided than Frasers, a potential deal raises questions about Frasers’ short-lived ownership of the brand. Frasers Group purchased Missguided out of administration in May 2022 and shortly after snapped up fellow fast-fashion brand I Saw It First.

A source close to the discussions told Retail Week while a deal has not yet been reached, Shein’s interest in acquiring the Missguided brand makes sense.

The source also said Frasers is rationalising its brands in the fashion segment and having gained expertise in ecommerce within the fashion retail space, it seems to be the right time to lean into the interest in the brand.

Investec retail analyst Kate Calvert says there is nothing unusual about the potential sale of the brand, as Frasers has always been a trader of assets.

“Shein might think it is quite a good name to develop for an own label because it is not going to give them anything new in terms of extra market share in the UK, they can get that easily themselves,” she says.

“Missguided is a business that struggled to make a profit for a very long time so one assumes that Frasers Group has decided, given that they are elevating their offer, that maybe it doesn’t fit in and they’ve been given a good offer by Shein and consequently they are just selling it on.”

Calvert adds that historically Frasers has done similar things and that once it has learned what it wants to from the business, rather than throwing more capital behind it, it sells it on.

While Mike Ashley’s ownership of Missguided could be short-lived, the retailer is likely to use the ecommerce experience gained and apply this to its vast portfolio.

The right fit

Despite Shein already stocking 12 brands online, including Emery Rose, Cuccoo, ROMWE and MOTF alongside beauty and childrenswear labels, Shein’s customer demographic will ultimately determine the success of Missguided if the deal goes through.

Stevenson says Shein may be eyeing Missguided as a growth opportunity as it already has the customer demographic at its fingertips.

“If Shein is a base then Missguided could be a premium brand from a price point, as a branded offer, it would be a point of difference for Shein.

“In terms of how scalable Missguided is, it is not a £5bn brand in the making at all. You could argue that it could be on a similar scale to PrettyLittleThing over time so there is clearly a growth opportunity there.”

Stevenson also says while Shein may be eyeing a growth opportunity in acquiring Missguided, it could also help the brand to level up when it comes to its agility.

“Missguided used to be a brilliant brand; it never really executed like Boohoo and PLT. When Boohoo and PLT were talking about test and repeat and initial orders of a couple of hundred units, Missguided was putting in fairly substantial orders in the thousands.

“They just weren’t as agile as its competitors. Shein could certainly help from that point of view.”

With a similar target customer, a close gap in regard to price point and quality, as well as agility in processes, Shein could ultimately help Missguided to level up and live up to the expectations that it has previously not reached, turning Missguided into a star sister brand rather than an outsider.