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Shares in online fast-fashion retailer Asos jumped more than a fifth on Thursday after the company said it would offload a majority stake in its Topshop and Topman brands for £135mn in cash to Danish retail tycoon Anders Holch Povlsen.
Asos, which bought Topshop, Topman, Miss Selfridge and HIIT for £265mn in 2021 after Sir Philip Green’s retail empire collapsed, is selling a 75 per cent stake in the two brands as part of a joint venture with Heartland, a holding company owned by the Povlsen family, that indirectly also owns 28 per cent of Asos.
The shares jumped 22.4 per cent to 450p, giving Asos a market capitalisation of more than £500mn on Thursday.
The group will ultimately retain a 22.5 per cent stake following a previous deal with US department store chain Nordstrom that allowed the latter to sell Topshop clothes in its stores, and which will own the remaining 2.5 per cent.
Asos has been struggling with shoppers returning to physical stores in greater numbers than expected after a boom in online shopping during the pandemic as well as the high cost of living, which has hurt consumer spending.
On Thursday, it also announced a refinancing plan as it admitted that sales continued to remain weak, with annual sales forecast to be “slightly below” previous guidance of a decline of up to 15 per cent. However, adjusted underlying profit is expected to come in at the top end of consensus estimates of between £20mn and £75mn.
Asos said it was offering £250mn in convertible bonds due in 2028 and a partial repurchase of its outstanding £500mn bond due in 2026. The brand has been trying to turn its fortunes around after a string of profit warnings in recent years and mounting losses.
Topshop gained cult status in the early 2000s after supermodel Kate Moss launched a fashion range in 2007. At the time, crowd-control measures had to be put in place at its flagship store on London’s Oxford Circus.
Pippa Stephens, a senior analyst at research company GlobalData, said that the Topshop and Topman brands “have been largely forgotten about by consumers since they were acquired by Asos . . . as their ranges get lost among the thousands of products and other third-party brands available” on Asos’s website. She welcomed the deal, saying the agreement “should help to bolster their visibility and regain appeal”.
However, Asos chief executive José Antonio Ramos Calamonte rejected the suggestion that the brands had been “forgotten” under Asos’s leadership.
“It’s been a journey of putting the brands back in shape for growth,” he said. “We have spent two years redoing the creative direction of the brands, redoing the whole supply chain, improving the quality [of clothes] and the relationship with suppliers.”
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