Frasers Group has reported a £12.5 million loss following the acquisition of Matches earlier this year.
- Despite a rise in adjusted profit, the group experienced a significant dip in overall profits and operating income.
- The acquisition, aimed at boosting the group’s ‘elevation strategy’, resulted in substantial trading losses.
- Further financial support for Matches was deemed non-viable by the group, leading to its administration.
- The brand name and intellectual assets were later acquired for £20 million to offset some losses.
Frasers Group, the retail conglomerate, has announced a £12.5 million loss after acquiring Matches, a decision which contributed to a 20.5% decrease in profit before tax, bringing it down to £507 million for the year ending 28 April 2024. Despite reporting a 13.1% increase in adjusted profit before tax to £544.8 million, the group’s revenue saw a dip as it continued to pursue its “elevation strategy.”
The acquisition of Matches for £51.9 million took place on 20 December last year, and by 8 March, the business was placed into administration. Frasers Group had provided substantial funding, yet Matches continued to amass considerable trading losses. The necessary additional funding was projected to exceed viable limits for the group, leading to a strategic reassessment.
Subsequently, the brand names and intellectual property were purchased for £20 million on 28 April, effectively reducing the amount owed to Frasers Group by Matches. The acquisition period recorded an £8.4 million trading loss, along with a £4.1 million loss on disposal, attributed to the disparity between the net assets’ value during administration and the anticipated recoveries.
Following this transaction, Matches’ retail operations, including its website and stores located in Mayfair, Marylebone, and Wimbledon, were closed. The reiterated focus was on minimising further losses while maintaining strategic value for Frasers Group.
Frasers Group’s acquisition of Matches highlights the complexities and financial risks inherent in retail mergers and acquisitions.
