The British clothing group Frasers announced on Friday the filing for bankruptcy of its luxury clothing subsidiary Matches Fashion, just purchased from the Apax Partners fund, in a context of slowing demand for high-end products.
Since Frasers acquired Matches,
“the company has systematically missed the objectives of its business plan and, despite the support of the group, has continued to record significant losses”
, points out Frasers in a press release.
“It became clear that too many changes would be necessary to restructure it, and the ongoing funding requirements would far exceed what the group considers viable
,” Matches management therefore
“took the decision to place the group into
judicial administration.”
, continues the press release.
Matches, which employed nearly 700 people at the start of 2023, according to the last published income statement, has both an online sales platform for luxury brands and three London stores.
Also read: Burberry down 18% in first-half profit after “slowdown in luxury demand”
Frasers hoped to turn things around
Frasers, owner in particular of Sports Direct and unsuccessful candidate last year for the takeover of Go Sport, announced in December the acquisition of Matches for around 52 million pounds (61 million euros).
The aim was to
“strengthen Frasers’ luxury offering”
as part of its upscaling strategy.
The group notably owns the House of Fraser and Flannels department stores.
Frasers acknowledged the company
"has been loss-making in recent years"
but hoped it could turn things around.
“Matches has been hit by the downturn in the luxury sector and appears to have buckled under the pressure
,” commented Russ Mould, analyst at AJ Bell.
“Frasers has taken enough bets on vulnerable companies over the years to know that you win some, but you also lose some.
Its acquisition of Matches falls into the latter category
,” continued the analyst.
“This may be the fastest failure of the Frasers empire, but the group will simply move on and look for the next opportunity
,” and
“investors don't seem too distressed”
about the situation, according to him.
Frasers shares fell 1.55% to 793.50 pence on the London Stock Exchange on Friday around 12:30 GMT, in a falling market.
The British luxury group Burberry, for its part, announced in January that it had significantly reduced its annual profit forecast.
This was a further deterioration in the situation of the company, which had already warned in November of a drop in global demand.