TIDMASC
RNS Number : 5062N
ASOS PLC
01 February 2021
THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION
1 February 2021
ASOS plc ("the Company")
Acceleration of ASOS Brands strategy
Acquisition of Topshop, Topman, Miss Selfridge & HIIT
-- Acquisition of Topshop, Topman, Miss Selfridge and HIIT brands 1 for GBP265m
-- Strategically compelling opportunity to acquire four strong, iconic fashion brands
-- Resonating with our core customer base; growth of 41% on ASOS in P1 FY21
-- Brands continued to grow well through effective models & retail channels in FY20
-- Established brand presence in UK, US and Germany
-- Complementary to existing ASOS Brand portfolio; increasing customer choice
-- Clear plan to use our market leading capabilities to drive growth globally and accelerate our ASOS Brands
strategy
-- Overlaying our world class design, buying and marketing capabilities to strengthen brands
-- Transforming the digital experience through full integration into the ASOS platform
-- All underpinned by our existing global warehouse and technology infrastructure
-- Selecting the best retail partners to accelerate global opportunities; accelerating US strategy via Nordstrom
partnership
-- Financially attractive transaction
-- FY20 online and retail partner revenue of c.GBP265m; split c.60:40 brand online / retail partners and
c.50:50 UK / international
-- Accretive to margin and double-digit return on capital (post tax) in first full year (FY22)
-- Fully funded from cash reserves; cash position remains robust
-- Completion 4th February
-- FY21 incremental EBITDA to be offset by initial ramp up costs
-- Additional one-off restructuring and transaction costs of c.GBP20m
Nick Beighton, CEO, commented:
"We are extremely proud to be the new owners of the Topshop,
Topman, Miss Selfridge and HIIT brands. The acquisition of these
iconic British brands is a hugely exciting moment for ASOS and our
customers and will help accelerate our multi-brand platform
strategy. We have been central to driving their recent growth
online and, under our ownership, we will develop them further,
using our design, marketing, technology and logistics expertise,
and working closely with key strategic retail partners in the UK
and around the world."
Strategic Opportunity
This acquisition represents a compelling strategic opportunity
in support of our mission to become the number one destination for
fashion loving 20-somethings worldwide. These are strong brands
that resonate well with our core customer base. Brand equity is
strongest in the UK and they have an established presence in both
the US and Germany, two of our key strategic markets.
The ASOS multi brand model has our ASOS brands at the core,
supplemented by a curated edit of the best product from the most
relevant brands globally. This transaction allows us to bring
iconic brands in-house, allowing us to overlay our core strengths
and transform them into leading digital first brands. As part of
this, the acquired brands will join our Venture Brands portfolio
alongside others including Collusion, AsYou and Reclaimed Vintage.
We will retain their established brand and customer positioning,
which is differentiated from our core ASOS Design and other ASOS
Brands. This enhances our ability to increase choice for customers
offering different customer styles, hero product and price points
across our ASOS Brands.
Strengthening the Brands
The brands we have acquired are strong consumer facing brands
that have continued to grow through key channels and we see a
significant opportunity to drive further growth for these brands
globally. We will do so through applying our industry leading
design talent and online retail experience. They will also benefit
from investment into customer engagement and brand positioning in
line with our existing model.
Beyond this, we will work to maximise the opportunity for the
brands global distribution. Our international warehouse
infrastructure and localised online experiences will support
continued growth through our own platform. In addition to this,
there is significant scope for selective development of strategic
retail partnerships. We see particular opportunity to increase the
brands' reach and accelerate our US strategy via partnership with
Nordstrom in this key market.
Integration
We will work to integrate these brands into our business
quickly. Our capacity to do so is supported by our ability to use
our existing warehouse and technology infrastructure. In addition,
we will transition c.300 employees across design, buying and retail
partnerships. As part of the integration process, we will undertake
a thorough review of the supply chain to ensure it complies with
all our Fashion with Integrity principles.
Across the remainder of the financial year, we will work to
re-engage suppliers and rebuild stock to support our future trading
plans. As part of this, we have worked with the administrators to
ensure future continuity of supply and have taken on and placed
some purchase orders accordingly. Our familiarity with these brands
and our experience developing and running in house brands, together
with our well-developed technology and warehouse infrastructure,
gives us confidence in our ability to execute the transition with
as little disruption as possible.
Financial Impact
The transaction values the brand assets at GBP265m and is fully
cash funded from existing cash reserves. Additionally, we will
purchase GBP30m of stock upfront to support initial trading before
we migrate the brands into our normal working capital cycle. We
expect to retain a net cash position at HY21, typically our lowest
point of the year.
In 2019, before impact of COVID, the brands delivered total
revenues of approximately GBP1bn across all channels, reflecting
the strength of the brands' equity. Despite business and supply
challenges over the last year, the brands continued to grow through
online and retail partnership channels, with total revenues in 2020
of approximately GBP265m as brand sales via retail partners grew
16% and brand online sales grew 5%. Growth on our ASOS platform has
been comfortably ahead of this level, at 41% in P1 FY21.
In FY21 we expect any incremental EBITDA to be offset by initial
investment and ramp up costs as we focus on integration, engaging
with retail partners and rebuilding stock to support our trading
plans. Additionally, we expect to incur one-off restructuring and
transaction costs of c.GBP20m.
We anticipate incremental sales in FY22 to be broadly flat to
FY20 acquired brand sales as we focus on driving growth on our ASOS
platform and through select strategic retail partnerships. The
acquisition is expected to be margin accretive, with strong
operating leverage given the relatively low incremental costs of
operation once integrated onto the ASOS platform. We expect the
transaction to deliver a double-digit return on capital (post tax)
in the first full year.
Other Financial Information
In the most recent 52 weeks ended 29th August 2020 Topshop,
Topman and Miss Selfridge made an unaudited EBITDA loss of
(GBP1.8m) across all channels. HIIT was a sub-brand of Burton,
which ASOS has chosen not to acquire, and accordingly profitability
is less readily available but it is estimated that the brand
generated a loss of approximately (GBP0.4m) across all
channels.
(1) ASOS has acquired the intellectual property assets of
Topshop, Topman, Miss Selfridge and HIIT from the joint
administrators of Arcadia Group Limited and its relevant
subsidiaries
The person responsible for arranging the release of this
announcement on behalf of ASOS is Anna Suchopar, General Counsel
and Company Secretary
Investor and Analyst conference call:
ASOS will be hosting a webcast for analysts and investors at
8.30am (UK time) today. Please join via the link:
https://analystspresentation.sparq.me.uk/ or dial +44 203 481 5237
, and use Meeting ID: 867 8710 8183
A recording of this webcast will be available on the ASOS Plc
investor centre website later today:
http://www.asosplc.com/investors.aspx
For further information:
ASOS plc Tel: 020 7756 1000
Nick Beighton, Chief Executive Officer
Mathew Dunn, Chief Financial Officer
Alison Lygo, Investor Relations
Website: www.asosplc.com/investors
Headland Consultancy Tel: 020 3805 4822
Susanna Voyle / Stephen Malthouse / Fay
Rajaratnam
JPMorgan Cazenove Tel: 020 7742 4000
Bill Hutchings / Christopher Wood
Numis Securities Tel: 020 7260 1000
Alex Ham / Jonathan Wilcox / Tom Jacob
Forward looking statements:
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements" (including words such as
"believe", "expect", "estimate", "intend", "anticipate" and words
of similar meaning). By their nature, forward-looking statements
involve risk and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
Background note
ASOS is an online retailer for fashion-loving 20-somethings
around the world, with a purpose to give its customers the
confidence to be whoever they want to be. Through its
market-leading app and mobile/desktop web experience, available in
ten languages and in over 200 markets, ASOS customers can shop a
curated edit of 85,000 products, sourced from 850 of the best
global and local third-party brands and its mix of fashion-led
in-house labels Ð ASOS Design, ASOS Edition, ASOS 4505 and
Collusion. ASOS aims to give all of its customers a truly
frictionless experience, with an ever-greater number of different
payment methods and hundreds of local deliveries and returns
options, including Next-Day and Same-Day Delivery, dispatched from
state-of-the-art fulfilment centres in the UK, US and Germany.
ASOSÕs websites attracted 280.4 million visits during December
2020 (December 2019(2) : 233.8 million) and as at 31 December 2020
it had 24.5 million active customers(3) (31 December 2019: 21.7
million), of which 7.6 million were located in the UK and 16.9
million were located in our international territories (31 December
2019: 6.7 million in the UK and 15.0 million internationally).
(2) Restated visits, previously reported number 239.0 million,
(3) Defined as having shopped in the last twelve months as at 31
December
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