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Just two months after purchasing online luxury retailer Matches for £52 million, Frasers Group is shutting it down.
In a statement released to the London Stock Exchange on Thursday, Frasers said that Matches would go into administration after continually missing its business plan targets, and making material losses. It continued: “While Matches’s management team has tried 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.”
A turnaround would have been an undertaking, though one Frasers seemed willing to take on. Matches reported its losses increased from £5.9 million in 2020 to £36.6 million in 2021, jumping again to £39.8 million in 2022. In 2023, losses again jumped to £70.9 million.
The quick unloading of Matches is the latest blow to online luxury marketplaces, which have seen a string of setbacks. In December, just before the Matches acquisition, Farfetch was acquired by South Korean e-commerce giant Coupang. Since, founder José Neves has stepped down, a move that signalled the end of an era for luxury’s e-commerce heyday.
It’s a pivot from Frasers’s initial plans for Matches. At the time of the December acquisition, CEO Michael Murray said the intention was for Matches to raise Frasers’s luxury profile (its other main luxury brand is Gen Z favourite multibrand retailer Flannels), and to facilitate a turnaround for the struggling retailer, which had previously been acquired by private equity firm Apax Partners in 2017 for £1 billion.
The British owner of brands including Sports Direct and Flannels has acquired the luxury retailer as part of its ongoing ‘elevation strategy’.
“Matches has always been a leader in online luxury retail and has incredible relationships with its brand partners,” Murray said at the time. “This acquisition will strengthen Frasers’s luxury offering, further deepening our relationships and accelerating our mission to provide consumers with access to the world’s best brands. Whilst the global luxury environment is softer, we are confident that, by leveraging our industry-leading ecosystem, we will unlock synergies and drive profitable growth for Matches.”
It’s unusual to put a brand into administration so soon after buying it, experts say – and the rationale for doing so is unclear. “[It] looks a bit careless,” says Neil Saunders, managing director at GlobalData. “However, Frasers probably anticipated that turning around Matches and boosting performance would be a lot easier. With a tough trading environment and several operational issues, such as brands ending their relationships, Matches has clearly not delivered to Frasers’s expectations.”
Saunders cautions that an administration process doesn’t mean Frasers is going to get rid of the Matches brand entirely. “It may well be using administration to restructure the company and streamline it without incurring excessive costs.” Frasers Group did not respond to a request for comment.
Luxury e-tailers have seen their value in the market slide. Saunders adds: “Frasers may have realised that Matches doesn’t bring much to the table in luxury that the business cannot achieve on its own with the expansion of concepts like Flannels.”
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