Asos bought the two brands, along with Miss Selfridge and HIIT, in 2021 from Philip Green’s collapsed Arcadia group for £265m. It did not acquire any of the 70 remaining Topshop or Topman stores, resulting in their closure and the loss of approximately 2,500 jobs.
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Since then Asos has struggled with a tumbling valuation as its share price has tumbled by more than 90% from heights of 5,770p at that time. The company intends to use the proceeds of the sale to reorganise its debt profile and has separately announced a £250m bond refinancing to help strengthen the balance sheet.
Asos also issued a trading update this morning in which it said it expects adjusted full-year earnings to be at the top end of consensus estimates, with sales slightly below guidance. The Topshop deal is expected to have a £10m to £20m negative impact on earnings before interest, tax, depreciation and amortisation (EBITDA) but will be “increasingly EBITDA accretive over time”.
“We’re pleased to be making this announcement today which is an important step in Asos’ continued transformation,” chief executive José Antonio Ramos Calamonte said.
“The joint venture and the launch of the refinancing will accelerate our strategy to both offer customers the best and most relevant product and to turn Asos into a company that delivers sustainable, profitable growth.
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“Topshop and Topman have made good progress since we acquired the brands in 2021. The new joint venture with Heartland is testament to the brands’ potential and the partnership will help bring Topshop and Topman to more customers globally.”
Heartland represents the interest of the Povlsen family business Bestseller, which holds a 28% stake in Asos. Mr Povlsen is also Scotland’s largest private landowner and in 2023 was listed as the country’s richest man, said to be worth £8.5 billion.
Although Topshop clothing made a limited reappearance on the high street in Asos’ first physical store, it has mainly been an online-only brand since Arcadia’s collapse. However, there is speculation that this could change.
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“This Scandi makeover could potentially herald a much bigger return of Topshop and Topman to bricks and mortar stores around the world,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Heartland owns Bestseller, which operates a raft of other brands, some with standalone UK stores like Jack and Jones, while its Vero Moda collection is sold by other retailers, including Next.”
She added: “Bestseller’s products are sold in 70 countries across Europe, Asia, North America, South America, Oceania and the Middle East while the wholesale business sells to more than 16,000 multi-brand and department stores globally. This deal could put Topshop back on the global fashion map: a dream Sir Philip Green tried to achieve but ultimately failed to realise.”