Matches Fashion future in doubt


Matches Fashion future in doubt

It has taken less than three months for Frasers Group (FG) to determine that its £52m acquisition of Matches Fashion, headquartered in The Shard, was not quite the catch it had hoped to land.

Previous owner Apax had mounted a sale process for Matches Fashion back in November, throwing in the towel rather than continuing to support its potentially lethal struggles which had cost it and its investors dearly. Acquisitive FG was keen to add to its roster of premium fashion brands, but rather than hold out for an eventual administration, it pushed ahead with an offer. In retrospect, paying rather too much for a declining and loss-making business that was quite clearly suffering from the downturn in demand in the luxury fashion segment. No fewer than four chief executives in the five years of Apax ownership had, in turn, failed to reverse the downward fall in the profitability of Matches Fashion.

New owner FG quickly found itself with c.£100m of stock that was mostly unpaid for and allegedly overambitious recovery plans. FG immediately called for negotiations with suppliers for reductions on invoices for the stock it held, while also imposing a reduction in the retailer’s marketing budget. FG sought a number of other radical changes to prevent Matches from haemorrhaging even more cash.

Teneo was called in, which the media got immediate wind of, and FG confirmed in a statement that it would not continue to fund Matches Fashion, having already pumped in a not-inconsiderable sum. That led to Matches Fashion CEO Nick Beighton having to inform 600 staff that the business was in administration and that half of them were being made redundant with immediate effect. Matches Fashion directors departed post-haste, leaving some 200 suppliers high and dry.

All in all, it is a sad situation. Matches was founded in 1987 and enjoyed a strong reputation in its heyday prior to the departure of its founders. Teneo is seeking a buyer and dealing with suppliers, some of whom are hoping to take back the stock they have not been paid for. As each day passes, the stock is worth less and less.

It is not known if FG will be considering an offer to acquire the business out of administration or if any other parties would now consider taking it on.

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