Asos to sell Topshop and Topman in £180m deal

Asos will continue to sell the Topshop and Topman brands online as part of a royalty deal for certain design and distribution rights. Picture: Gareth Chaney/Collins

Asos has agreed to sell its Topshop and Topman brands to a new joint venture with the holding company of Danish billionaire Anders Holch Povlsen in a deal valuing them at £180m (€213m), the online retailer said.

Shares in Asos soared 18% on Thursday after news of the sale, along with an upbeat group performance update and a debt refinancing plan that reassured investors.

Asos has been struggling with losses and faced intense competition in Europe from the likes of fast-fashion firm Shein and is going through a transformation under a new strategy.

It expects to get about £118m in net proceeds from the sale to the joint venture with Heartland, which owns retail fashion group Bestseller, Asos' biggest shareholder.

Asos said the cash would help it to strengthen its balance sheet.

Heartland will own 75% of the new entity and a unit of Asos the remaining 25%.

Asos will continue to sell the Topshop and Topman brands online as part of a royalty deal for certain design and distribution rights.

It bought Topshop in 2021 from the administrators of Philip Green's collapsed Arcadia group, along with its Topman, Miss Selfridge and HIIT brands, for £265m.

Annual adjusted core profit

Asos said it expects annual adjusted core profit at the top end of market predictions but said sales would be slightly below its previous forecast.

"We've been making decisions to drive profitability rather than just purely going after the sales number," finance chief Dave Murray told analysts and investors on a conference call.

Chief executive José Antonio Ramos Calamonte said the group has seen improved profitability in US and UK markets, although challenges remained in Germany.

Asos said it was offering £250m inconvertible bonds due in 2028 and a partial repurchase of its outstanding 500-million-pound bond due in 2026.

Berenberg analyst Matthew Abraham said the strong trading update and the refinancing were positive indicators of strategic direction "that puts the business on firmer financial footing".

In 2021, Asos partnered with US retailer Nordstrom in a new joint venture that saw Topshop clothes sold in physical stores for the first time since the brand collapsed in the previous year.

Nordstrom first struck a deal with the former Arcadia brand more than a decade ago.

• Reuters with additional reporting from PA