Following the news that ASOS is selling a 75% stake in Topshop and Topman to Heartland amid refinancing:

Pippa Stephens, Senior Apparel Analyst at GlobalData, a leading data and analytics company, offers her view:

“ASOS’ decision to enter into a joint venture with Heartland for Topshop and Topman provides potential for their return to relevance. The brands, previously owned by Arcadia, have been largely forgotten about by consumers since they were acquired by ASOS in 2021, as their ranges get lost among the thousands of products and other third-party brands available through the online pureplay. However, the relaunch of their own dedicated websites and increased accessibility through wholesale partners, both online and offline, should help to bolster their visibility and regain appeal.

“Topshop and Topman were two of the most popular brands in the UK from the 90s up until the late 2010s; however, their desirability waned significantly in the last few years with Arcadia, and this has fallen even further under ASOS’ ownership, so Heartland has a challenge ahead in bringing them back to life. Heartland also owns the Bestseller group, which holds brands such as Vero Moda and Jack & Jones, and has been experiencing consistent growth. Therefore, its fashion expertise makes it well placed to turn Topshop and Topman around, with more exciting designs and improved quality needed.

“This joint venture, alongside the news of ASOS’ refinancing, clearly indicates the troubles the digital retailer is still facing, with its sales for the year ending September 2024 expected to come through below its previous guidance, which was already expecting a decline of up to 15%. ASOS has suffered from a loss of relevance, with Gen Z shoppers preferring more affordable players like Shein and Cider, while its former millennial customers now find its designs too youthful, with some also trading up to premium brands that offer greater quality and value for money.

“That being said, the green shoots from its Back to Fashion strategy provide some hope, with the shorter lead times of its Test & React model and greater breadth of products from Partner Fulfils, helping it more successfully compete within the saturated online market.”