LONDON — Frasers Group is putting luxury online retailer Matches into administration two months after buying it at a knockdown price from Apax Partners.
In a statement released to the London Stock Exchange late Thursday, Frasers said Matches “has consistently missed its business plan targets and … has continued to make material losses. While Matches’ management team has tried to try to find a way to stabilize the business, it has become clear that too much change would be required to restructure it, and the continued funding requirements would be far in excess of amounts that the group considers to be viable.”
Frasers added that in light of the situation, Matches has been put into administration. “Frasers remains committed to the luxury market and its brand partners,” the company added.
The decision to shut Matches is an about-face for Frasers, which paid 52 million pounds for the retailer shortly before Christmas and touted its turnaround plans.
At the time, Michael Murray, chief executive officer of Frasers, said that “while the global luxury environment is softer, we are confident that, by leveraging our industry-leading ecosystem, we will unlock synergies and drive profitable growth for Matches.”
Murray described Matches as “a leader in online luxury retail which has incredible relationships with its brand partners. This acquisition will strengthen Frasers’ luxury offering, further deepening our relationships and accelerating our mission to provide consumers with access to the world’s best brands.”
Nick Beighton, Matches’ CEO, was equally upbeat at the time of the sale.
“Being part of Frasers, with their utter commitment to luxury, will give this business access to greater scale, best-in-class retail expertise, and the financial stability it needs to more effectively deliver for our brand partners and our customers,” Beighton said.
The turnaround job was always going to be a big one. In the fiscal year ended on Jan. 31, 2023, Matches’ sales dipped 1.7 percent to 380.1 million pounds, while losses widened to 70.9 million pounds from 39.8 million pounds.
However, Frasers’ decision should come as no surprise. The company’s ultimate owner, Mike Ashley, is known in the U.K. as the Grim Reaper of the high street.
He specializes in buying stakes in distressed companies, or in brands that sell (or can potentially sell) through his retail chains, often at a steep discount.
The purchase price of Matches was a fraction of the $1 billion price that private equity firm Apax was reported to have paid for it in 2017. It is likely some of the brands currently supplying Matches will now sell their wares at Frasers Group retailers.
Frasers owns retail brands including Sports Direct, Flannels, Agent Provocateur, Jack Wills and the House of Fraser stores.
The collapse of Matches is the latest chapter in a sorry tale of online fashion retailers both in the U.K. and abroad. Companies that were once riding high and viewed as go-to destinations for fashion, luxury and creative, immersive retail, have watched their valuations evaporate amid slowing demand for luxury and spiking interest rates and inflation.
As reported, Farfetch was purchased out of administration by Coupang late last year, while Compagnie Financière Richemont continues to look for a buyer for Yoox Net-a-porter after writing down the value of the pioneering online fashion retailer.
Richemont was on the brink of selling YNAP to Farfetch before it collapsed and called off the deal after Coupang purchased the company.
The fate of Browns, which was part of the Farfetch portfolio, remains unclear. According to Italian press reports, Coupang has hired Rothschild to find a buyer for the retailer.
