After months of twists and turns, Frasers Group and its chief executive Michael Murray swooped in to snap up Missguided out of administration. With his first move to reappoint founder and chief executive Nitin Passi, can this new dream team turn things around? 

Missguided has become the first high-profile fashion casualty of the post-pandemic world as supply chain woes and the cost of living crisis take their toll on businesses and consumers alike.

The former fast-fashion darling has undergone a number of challenges in recent years – culminating in its sale to Alteri late last year, and the exit of founder and chief executive Nitin Passi in April as the etailer explored its “strategic options”. 

Fashion rivals including Boohoo, Asos and JD Sports were rumoured to be in the running to take over the struggling fashion label, but it was Frasers Group that emerged victorious after it tumbled into administration last week.

The group has now brought Passi back into the fold as chief executive under their umbrella, retaining his vision and expertise for the fashion brand.

Frasers, which owns brands such as Sports Direct, House of Fraser, Jack Wills and Studio, bought Missguided for £20m – the first acquisition since Michael Murray took over as chief executive from his father-in-law Mike Ashley.

Can Missguided’s fortunes be revived by Frasers, or would it have been better off going in a different direction?

Drawn out process

Missguided’s search for a new backer began in January 2021 but supply chain troubles and tumbling valuations put off many interested parties at the time.

This led to the Alteri acquisition – the company, which was backed by Apollo, took a majority stake in Missguided with plans to invest the funds needed to keep the business afloat while it continued to search for a big fashion buyer.

Missguided

Missguided can introduce the Frasers Group to a new demographic

Alteri’s backing was not enough, however, and the company continued to suffer, as it dealt with increased competitiveness from other online fashion players, resulting in a round of redundancies in April as it tried to right-size the business.

On paper, Frasers was not the obvious choice to rescue a fast-fashion brand. Both Boohoo and Asos were linked with a move for Missguided and last year battled it out for Arcadia’s crown jewels.

A source close to Missguided says Boohoo had entered exclusive talks with the brand but was put off by two factors: the transfer of Missguided’s workforce; and a letter from workers’ rights organisation Labour Behind the Label that expressed concerns about its supply chain.

The letter called out Missguided for neglecting to pay its suppliers and said the government had failed to “take a meaningful step forward in overseeing the poor behaviour and abusive purchasing practices of brands”.

As Boohoo has been in the spotlight for its Leicester supply chain mismanagement in recent few years, incorporating Missguided would incur a big risk to the fashion giant’s reputation. 

As its interest waned, moves from Asos, JD Sports and even an eleventh-hour bid from Passi with an unnamed backer emerged, but Missguided was ultimately won by Frasers.

Bricks and clicks

Where Boohoo may not have been keen to take on Missguided’s workforce, Fraser’s has instead welcomed the additions to its existing teams.

Despite having a diverse portfolio of brands, Frasers has a relatively limited knowledge of the young female demographic in the fashion market. Murray highlighted the Missguided acquisition as a way for the group to rectify this.

Missguided store exterior

Missguided has performed well at bricks-and-mortar stores in the past

“We are delighted to secure a long-term future for Missguided, which will benefit from the strength and scale of Frasers Group’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 said last week.  

Frasers is also a savvy operator in the retail property market and Missguided could work well in a physical setting if the leases were right. Previous Missguided fascias in Bluewater and Westfield shopping centres were said to have traded strongly but were dragged down by spiralling pre-pandemic rents, while its Asda concession partnership has been a success.

While Missguided may not have any immediate synergies with the rest of Frasers’ brands, its activewear range could easily be incorporated into Sports Direct, while party and dress ranges could work in House of Fraser concessions.

Frasers is keen to take advantage of Missguided’s data and trends analytics and integrate its speed to market capabilities into its other stable of brands. This will aid Frasers in driving sales and brand awareness amongst younger consumers for the likes of USA Pro or Jack Wills.

While Frasers has not yet confirmed how many of Missguided’s 340 staff it will retain, the two businesses have entered an eight-week transition period, allowing Frasers to review all of Missguided’s assets.

A source close to the deal said Frasers has currently only acquired Missguided’s intellectual property but is also looking into its other assets including its stock inventory and supply chain infrastructure. 

“Frasers Group will be taking a new direction with its acquisition of Missguided, as the value online retailer is a clear digression away from the group’s typical sports and premium fascias,” says GlobalData analyst Darcey Jupp, explaining how Missguided may ultimately fit into the group.

“However, its purchase of the IP for just £20m is certainly a punt worth taking – particularly if Frasers can leverage its operational scale to recapture Missguided’s young audience and make the brand competitive once again.

“Operating Missguided as a standalone brand is a wise move, as its young target audience would not be inclined to shop at its other fascias like House of Fraser.”

The deal may have taken some by surprise but with a strong existing customer base and proposition, combined with new leadership, Frasers might be the perfect place for Missguided to rebuild.

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