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Frasers Group Acquires Missguided. What Does This Mean for Boohoo?

Simon Mugo trader
Updated 1 Jun 2022

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Key points:

  • Frasers Group just acquired Missguided fashion for £20 million.
  • The fashion company had sunk into administration earlier this week.
  • The move is a win for Frasers since Boohoo was also interested.

The Frasers Group PLC (LON: FRAS) today announced that it had acquired the Missguided fashion brand after it sunk into administration yesterday. However, the company said it would keep looking for a buyer after appointing Teneo Financial Advisory as its administrator.

Also read: The Best Clothing Stocks To Buy Now.

The fashion brand did not have to wait for long as Frasers’ quickly grabbed the opportunity to acquire a competing fashion brand at a discount. The company is known for its House of Fraser department store chain and paid £20 million to acquire Missguided Fashion’s assets.

Frasers’ acquired Missguided Limited’s intellectual property, Mennace Limited, which is also under administration, and Misguided (IP) Limited. Investors barely reacted to the acquisition amid worries that even the big players in the fashion industry are not doing well.

Missguided has struggled to pay its suppliers amid steep competition from larger firms such as Boohoo, ASOS and Frasers Group, which have dominated the market. Some of its suppliers had warned that they risked going bankrupt if the fashion retailer did not pay its outstanding bills.

The acquisition is a significant win for Frasers’ given that its main rival Boohoo was also rumoured to be interested in acquiring Missguided fashion. The fast fashion industry is facing significant headwinds, and the larger firms have not been spared.

For example, Boohoo recorded a loss for the year to 28 February 2022. In addition, the entire industry is facing significant scrutiny from the media as discussions about the impact of fast fashion on the environment dominate the news.

It is becoming clear that fast fashion negatively impacts the environment, but its appeal among consumers remains high. The main driver behind the high demand for fast fashion items is their low prices.

Most consumers targeted by fast fashion brands such as Boohoo are young people with minimal disposable income to spend on the longer-lasting, higher-quality fashion items produced by other companies since they tend to cost much more.

However, even this group of consumers now have second thoughts about buying fast fashion.

*This is not investment advice. Always do your due diligence before making investment decisions.

Frasers share price.

Frasers share price 01-06-2022
Source: IG

Frasers’ share price barely moved following its acquisition of the Missguided fashion brand.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading