Asos buys Arcadia brands, with 2,500 jobs to go

British online clothing retailer buys some of the most popular fashion labels on the high street

A man wearing a face mask to curb the spread of coronavirus walks past a closed brach of Topshop where Old Quebec Street joins Oxford Street, in London, Monday, Feb. 1, 2021, during England's third national lockdown since the coronavirus outbreak began. Online fashion seller Asos has bought Topshop, which once boasted designs by Kate Moss and Beyonce, along with three other brands for 265 million pounds ($363 million) as rivals scoop up bargains after the collapse of Britain’s Arcadia retail group. The deal, announced Monday, puts thousands of jobs at risk because Asos acquired the Topshop, Topman, Miss Selfridge’s and HIIT brands but none of their stores.(AP Photo/Matt Dunham)
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British online clothing retailer Asos bought brands from the collapsed Arcadia group on Monday, including Topshop, but not its UK stores, resulting in about 2,500 job losses.

Asos, which has had strong demand during the pandemic, also acquired the Topman, Miss Selfridge and HIIT brands in a deal worth £330 million ($452m), administrator Deloitte said.

Arcadia and UK department store chain Debenhams collapsed in December, having struggled to move from in-store businesses long before the coronavirus pandemic forced shoppers online.

Debenhams' disappearance caused 12,000 job losses, while 10,500 more at Arcadia could be lost if, as expected, no one bids for its shops.

Retail trade union Usdaw called on the British government to help support the UK's main shopping streets, which are under increasing threat from online retailers such as US giant Amazon.

"Retail is crucial to our town and city centres," Usdaw national officer Dave Gill said. "It employs around three million people across the UK.

"The government must take this seriously. We need a recovery plan to get the industry back on its feet."

Arcadia's collapse has capped a spectacular fall from grace for owner Philip Green.

Once dubbed "the king of the high street", Mr Green's reputation had already been severely damaged by the demise of his British department store chain BHS in 2016.

"After much speculation, Asos has won the prized assets from the fallen kingdom of Arcadia," said Russ Mould, investment director at stockbroker AJ Bell.

"This looks like a decent deal and one that gives Asos the ability to earn higher margins from clothes that it was already selling through its platform under a previous partnership deal.

"It means the high street is left with even more vacant stores, and names strong enough to keep standing, such as Zara and H&M, are left in an even stronger position."

Another online clothing retailer, Boohoo, is in talks to buy Arcadia brands Dorothy Perkins, Wallis and Burton.

But it is not expected to purchase about 370 shops that share the brands' names. Boohoo has already agreed to buy the Debenhams brand.

Asos is paying £265m for the four brands, plus £65m for remaining stock.

Britain's retail landscape has been dramatically redrawn by pandemic lockdowns that have increasingly forced consumers to shop online from the safety of their own homes.

It has given a major boost to online businesses that are not burdened by the cost of high-street shops, enabling Asos and others to expand rapidly.

"Online retailers are certainly taking advantage of the current challenging operating environment for physical retailers to take the opportunity to broaden their portfolios," said analyst Maria Bogdanova at research consultancy Euromonitor International.

Usdaw said the UK had almost 180,000 retail job losses and about 20,000 shop closures last year.

"Each one of those job losses is a personal tragedy for the individual worker and store closures are scarring our high streets and communities," Mr Gill said.

Asos said the popular Arcadia brands it has gained would "resonate" with its youthful customer base.

"This acquisition represents a compelling strategic opportunity in support of our mission to become the number one destination for fashion loving 20-somethings worldwide," it said.