Article about ASOS from Washington Post11 Jan 2023 20:32
Asos Looks a Lot Better Off Without Topshop - Tuesday 10 January 2023 - Washington Post
The online retailer, which for many years generated the sort of sales growth that high street stores could only dream of, is now grappling with a downturn in digital demand alongside a looming refinancing. Asos faces a potential shareholder rebellion at its annual meeting on Wednesday. A day later, it will report first-quarter sales.
But there is a solution to its tight fit: Sell Topshop, the storied fashion brand it bought two years ago from the ruins of Arcadia, Philip Green’s retail empire that collapsed into administration in late 2020.
If Asos could achieve a similar price to what it paid — about £300 million ($364 million) — it would bolster the balance sheet. It recently renegotiated the terms of a £350 million revolving credit facility, with tests of its financial strength suspended until next year. The facility matures in 2024, so Asos will need to refinance this year. Bloomberg News reported recently that the company was discussing whether to add restructuring expertise to its finance team.
But there are other reasons why Asos should consider offloading Topshop.
The retailer was founded in the 1960s, but it was only in the late 1990s and noughties that it became a fashion force, teaming up with supermodel Kate Moss to produce a collection that drew large crowds to its once iconic store on London’s Oxford Street. Then, in the years before Arcadia’s collapse, it struggled to regain its fashion spark amid competition from Asos itself, as well as other rivals such as Boohoo Group Plc and Associated British Foods Plc’s Primark.
Joining the Asos stable promised a fresh start. But today the brand — which no longer has any UK stores — is still searching for that old magic.
It was relaunched last autumn with the first designs created entirely under Asos’s ownership. Its new parent established a dedicated digital storefront for the brand on its website, as well as a new monogram. Yet Topshop still lacks visibility, particularly among those older customers who grew up with it but may not be regular Asos shoppers. The name is not being marketed as effectively as other Arcadia brands bought by Boohoo, such as Dorothy Perkins.
Asos recognizes the shortcomings. New Chief Executive Officer Jose Antonio Ramos Calamonte is reviewing the way Asos reaches its customers, which could give Topshop’s marketing more clout. But there is a strong argument for the name returning to the British high street.
In its heyday, part of Topshop’s appeal was getting to browse its stores for skinny jeans, fake fur coats and floral dresses. These days, consumers are rediscovering an appetite for in-person purchasing. And Topshop can still be found in 100 Nordstrom locations in the US and Canada, thanks to a deal last year whereby the department store took a minority stake in Asos’s former Arcadia brands.
Yet as Asos grapples with a surfeit of stock, a potenti
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