Designer brands platform Matches is being put into administration less than three months after it was bought by Mike Ashley's Frasers Group.

The company spent £52m on the loss-making retailer in December and had planned to turn it around.

But Frasers, which has been adding more upmarket brands to its original Sports Directs-focused business, said Matches was making unsustainable losses.

"Too much change would be required to restructure it," the group said.

Matches, which sells items from established designers such as Balenciaga, Gucci and Prada, is a UK business but makes most of its money selling overseas.

It was founded more than 30 years ago by husband-and-wife team Tom and Ruth Chapman from their shop in Wimbledon, south-west London, before moving online.

The Chapmans sold a majority stake in the business to private equity group Apax Partners in 2017, who then sold the business on to Frasers Group.

Currently, Matches has a flagship store in Mayfair with two retail floors and two floors of private shopping suites. It also boasts two other London sites where it offers personal styling advice.

But most of its business is online, including selling to 176 other countries.

It is unclear what the process of winding up Matches will mean for the firm's 533 employees.

Media reports suggested the company had been pushing for discounts from its suppliers in recent weeks.

"It appears that the issues at Matches were more significant than Frasers first thought," said Catherine Shuttleworth, chief executive of retail analysis firm Savvy.

"Consumer confidence remains fragile and even luxury clothing shoppers are changing purchase behaviour. We know that 74% of shoppers are cutting back on the number of clothes that they buy."

Matches future 'not yet certain'

Alice Price, apparel analyst at data analytics firm Globaldata added that selling luxury goods online was particularly tough, since shoppers prefer to see and try on expensive products.

"Supplier relations had also begun to sour under Frasers’ ownership, with the fashion giant reportedly seeking sizeable discounts, while some brands reported overdue payments, resorting to termination of contracts," she said.

"It is not yet certain if Frasers Group will dissolve Matches completely or is using the administration to restructure the business and reduce its operational costs."

In a statement Frasers Group said the business had "consistently missed its business plan targets" and was making "material losses".

"The continued funding requirements would be far in excess of amounts that the Group considers to be viable," it said.

However, Frasers said it remained committed to the luxury market.

Two years ago Mr Ashley, who founded Sports Direct and established its reputation with cut-price deals on sports goods, handed the reins to his son-in-law, Michael Murray.

Mr Murray has taken a different tack targeting "new, luxury, aspirational" customers, and bought 60 Flannels stores, which sell designer clothes.

The Group now includes Jack Wills, Sofa.com, Game, Evans Cycles, Gieves and Hawkes, and House of Fraser.

Mr Ashley remains the majority shareholder.

Source:
courtesy of BBC NEWS

by Lucy Hooker | Business reporter, BBC News

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