Frasers buys Matches at knockdown price, elevation strategy gets huge boost

In a deal that’s not exactly a surprise, Frasers Group has made another key purchase. This time it’s Matches, the luxury e-tailer that was sold less than a decade ago for hundreds of millions of pounds. And the price now? £52 million.

It underlines the struggles of the luxury online sector, especially given the earlier news of Farfetch being sold to Coupang. 

Frasers is buying 100% of the business from Apex Partners subsidiary MF Intermediate Limited.

The company said the purchase will further its elevation strategy and strengthen its luxury offer that has been led until now by its fast-growing Flannels chain.
So far we know that Nick Beighton — the ex-ASOS chief who’s the Matches CEO — is staying on and will “work closely with the Frasers team to develop a strategy to successfully build on the underlying strength of the business whilst rapidly unlocking synergies with Frasers”.

Frasers CEO Michael Murray hailed Matches’ “incredible relationships with its brand partners” and while he admitted that the “global luxury environment is softer” (which is what partly led to Matches and Farfetch coining onto the market in the first place), he added that “we are confident that, by leveraging our industry-leading ecosystem, we will unlock synergies and drive profitable growth for Matches”.

Beighton highlighted the progress that has been made since he joined last year, “sharpening our brand and product curation and improving the day-to-day operations of the business”.

He said the trading performance has been “resilient… despite the challenging economic backdrop” and that “being part of Frasers, with their utter commitment to luxury, will give this business access to greater scale, best-in-class retail expertise and the financial stability it needs to more effectively deliver for our brand partners and our customers”.

But there’s no denying that the business has had a tough time in recent years. It was sold by its founders in 2017, and since then has had as many as four different CEOs with its current chief joining just over a year ago. 

It has also received cash injections from its owners as Beighton navigated a tough market and launched a three-year recovery plan. Its latest results (for the year to the end of January) showed its losses widening to more than £67 million.

But Matches remains one of the most prominent of the raft of online luxury retailers that have come out of the UK since the e-commerce revolution began, and since luxury brands realised that it might be a good channel for them.

Frasers has shown itself to be a good custodian of luxury businesses in recent periods, and while its Flannels chain has suffered some of the softness being seen by luxury at the moment, at a headline level it has gone from strength to strength.