British retail magnate Mike Ashley’s Frasers Group bought troubled fast-fashion retailer Missguided out of administration on Wednesday for 20 million pounds, or $25.16 million, edging out competitors like Boohoo, Shein, and JD Sports.
The owner of House of Fraser, Sports Direct, Flannels, Agent Provocateur, and Jack Wills has also purchased Mennace, the men’s wear brand of Missguided. Following completion, Missguided will be operated by the administrator for around eight weeks. After that, the Manchester-based brand will operate as a standalone business within Frasers Group.
Michael Murray, chief executive of Frasers Group and future son-in-law of group owner Mike Ashley, said: “We are delighted to secure a long-term future for Missguided, which will benefit from the strength and scale of FG’s platform and our operational excellence.
“Missguided’s digital-first approach to the latest trends in women’s fashion will bring additional expertise to the wider Frasers Group,” he added.
Missguided fell into administration as it was unable to pay back creditors. The brand appointed Teneo Financial Advisory as administrator on Monday after a winding-up petition was issued by its suppliers, which are owed millions by the former sponsor of the hit reality TV show “Love Island.”
Last month Missguided asked Teneo to explore strategic options for the business, including a possible sale, but a deal could not be reached. At the same time, Nitin Passi, founder of Missguided, stepped down as chief executive officer, but remains on the e-tailer’s holding company board after navigating Missguided through its recent fundraising and strategic review.
Once a British success story, with a highly entertaining four-part documentary titled “Inside Missguided: Made in Manchester” charting the highs and lows of the brand, Missguided has fallen behind compared to competitors like Boohoo and Asos in recent years, and faced supply-chain challenges.
Last weekend, The Times revealed that Boohoo emerged as a front-runner to Missguided in a pre-pack deal, but an agreement was never reached.
Freddy Khalastchi, business recovery partner at accountancy firm Menzies, commented that the administrators’ decision to sell the business to Frasers Group is “a last-ditch attempt to turn its fortunes around, by securing jobs and allowing the brand to live on.”
“Missguided’s demise is no real surprise – the company has been struggling to compete with fashion retail giants such as Boohoo and Shein. Alteri Investors bought a 50 percent stake in the company at the end of 2021, and has since plowed in more funding in an attempt stave off insolvency,” he added.
Khalastchi advised that online fashion retailers need to have “a watertight returns policy” to solidify their financial position, as costs in this area can easily get out of control, and be mindful of the recent cost hikes for energy and fuel, which have impacted many, especially those that were already teetering on the brink of insolvency.
“It is possible for online fashion retailers to achieve growth in the current climate, but the situation at Missguided proves that just funnelling money into a business won’t help. Investing in a solid long-term growth strategy, close cost management, and looking for ways to differentiate the business are vital to stay ahead of the competition,” Khalastchi added.
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