ASOS sells 75% stake in Topshop to Heartland for $265.2m
ASOS is selling a 75% stake in Topshop and Topman to Heartland, the investment firm behind fashion brands like Vero Moda and Jack & Jones. This move is part of ASOS' broader refinancing efforts.
Transaction snapshot
Deal value: $265.2 million (£135 million)
Deal multiples: N/A
Deal type: Joint venture
Investors: ASOS (25%), Heartland (75%)
The joint venture grants ASOS certain design and distribution rights for the Topshop and Topman brands in exchange for a royalty fee, allowing it to continue selling the brands online. The deal is set to complete in Q4 2024.
This deal offers a chance for Topshop and Topman to regain popularity. Since ASOS acquired the brands in 2021, they have struggled to stand out amongst ASOS's extensive product range.
The relaunch of dedicated websites for Topshop and Topman, along with increased accessibility through wholesale partners, both online and offline, should help boost their visibility and appeal.
Heartland's fashion expertise, demonstrated by the growth of its Bestseller group, positions it well to revitalise the brands. Heartland could also focus on improving designs and quality to breathe new life into Topshop and Topman.
This sale also highlights ASOS's ongoing challenges. The retailer expects a sales decline of up to 15% by September 2024, as it loses ground to cheaper competitors like Shein and Cider, while millennials move to premium brands.
ASOS expects the deal to have a $19.6 million to $39.2 million (£10 million to £20 million) negative impact on EBITDA for FY25 but will become increasingly EBITDA accretive over time.
Alongside the Topshop announcement, ASOS issued a trading update for FY24 and launched a $490 million (£250 million) bond refinancing. The company expects adjusted EBITDA at the top end of consensus estimates, with sales slightly below guidance.
José Antonio Ramos Calamonte, CEO of ASOS, stated that the new joint venture with Heartland is a testament to Topshop and Topman's potential and will help bring the brands to more customers globally.
