British online retailer Asos has agreed to sell a 75% stake in its Topshop and Topman brands to investment company Heartland for £135 million (approximately $180 million), multiple sources report. The new joint venture would see Asos retain a 25% share of the business. The deal includes a pro-rata payment to Nordstrom to buy out its minority interest in the brands, which the department store acquired as part of a previous joint venture with Asos back in July 2021.
Asos acquired the Topshop brand portfolio — which also included the Miss Selfridge and HIIT brands — from the bankrupt Arcadia Group in February 2021 for £265 million (approximately $411 million). Following the acquisition, all Topshop stores closed and the brands have since operated online only with some wholesale distribution, including at Nordstrom. But the brands had become a drag on Asos’ bottom line, and a selloff has been rumored for over a year now. For the first half of Asos’ fiscal year 2024, which ended March 3, 2024, revenue fell 18% to £1.5 billion, due in large part to heavy discounting as the retailer looked to clear old stock.
Deal Presents New Growth Opportunities for Topshop
Heartland is a British investment and holding company that represents the interests of Danish billionaire Anders Holch Povlsen and his family business Bestseller. Asos expects to get approximately £118 million pounds in net proceeds from the sale, which it will use to strengthen its balance sheet. “We’ve been making decisions to drive profitability rather than just purely going after the sales number,” said Asos CFO Dave Murray on a conference call with analysts.
Asos’ stake in the joint venture with Heartland also grants the online retailer certain design and distribution rights in return for a royalty fee, allowing the company to continue marketing and selling the brands online. Analysts have noted that the deal has the potential to open the Topshop and Topman brands to additional wholesale arrangements. Heartland’s Bestseller operates an extensive wholesale and retail business with more than £4 billion sales across its channels, which includes 2,800 retail stores in more than 30 countries, according to GlobalData.
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“Topshop and Topman have made good progress since we acquired the brands in 2021,” said José Antonio Ramos Calamonte, CEO of Asos, in a statement. “The new joint venture 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 realizing the best value structure for Asos shareholders today.”
