Frasers to take over Matches, leading to administration

On Thursday, Frasers said that since it acquired the business, “Matches…has consistently missed its business plan targets and, notwithstanding support from the group, has continued to make material losses. Whilst Matches' management team has tried to try to find a way to stabilise the business, it has become clear that too much change would be required to restructure it, and the continued funding requirements would be far in excess of amounts that the group considers to be viable. In light of this, Frasers has been informed that the directors of Matches have taken the decision to put the Matches group into administration. Frasers remains committed to the luxury market and its brand partners”.

Insiders suggested that the most likely end result is that Frasers would aim to retain control of the business through a pre-pack insolvency deal, although it's unclear at present whether it will continue. .  

Matches is led by former ASOS chief Nick Beighton and he was believed to have stabilised its performance after a succession of CEOs and weak results. But it’s also unclear what his future will be.

Frasers CEO Michael Murray had hailed Matches’ “incredible relationships with its brand partners” when it bought brand just before Christmas with the purchase seen as a key part of the new owner’s ongoing elevation strategy.

But the company was clearly not in a good state. Sky News said sources told it Frasers had tried to secure big discounts from suppliers since taking over, something some labels were unhappy about.

Matches was founded by Tom and Ruth Chapman over 30 years ago, beginning as a single store in Wimbledon, London, and later expanding to more stores but with a heavy focus on its global webstore. Its purchase by Apax Partners almost seven years ago was clearly a disaster for the private equity group, which not only paid hundreds of million but invested heavily in it after the purchase.

The company is only the latest of a raft of luxury e-tailers to ride high then come crashing down as they struggled to achieve profitability.

Farfetch’s recent acquisition by Coupang was another sign of this trend, while Yoox Net-A-Porter’s future is still up in the air after the deal for Farfetch to take it over from Richemont was terminated.

And putting a recent multi-million pound acquisition into administration is becoming something of a trend. Aurelius’s £207 million recent purchase of The Body Shop was followed not long after by that company going into administration with a large number of stores being shuttered.