Mike Ashley, the founder of Frasers Group, is seeking to become Britain’s version of Bernard Arnault by expanding his presence in the luxury market. He recently acquired luxury online retailer Matches in an effort to revive the company and expand his luxury portfolio.
Although known for his affordable Sports Direct chain, Ashley has quietly been building his luxury empire. He acquired Flannels in 2012 and took on House of Fraser in 2018. However, the premium lifestyle division, consisting of Flannels and House of Fraser, did not make a profit in the previous fiscal year.
Ashley’s acquisition of Matches presents an opportunity to further expand his luxury footprint. He secured the deal at a bargain price, significantly below what Apax Partners paid in 2017. Matches will contribute to Frasers’ “elevation strategy,” led by CEO Michael Murray, Ashley’s son-in-law. This acquisition will bring new brands into Frasers’ luxury ecosystem and expand its international reach.
Managing owned brands is not new to Frasers, as demonstrated by its Sports Direct division. Ashley’s cost-cutting abilities may also provide opportunities to optimize expenses at Matches. However, there are risks associated with the acquisition, including the inherent expenses of selling designer clothing and handbags, as well as the challenges of profitability in the e-commerce sector.
There is also a risk that luxury brands may not want to continue supplying Matches under Ashley’s ownership. Many luxury brands have been reducing their reliance on third-party retailers and focusing on their own stores and websites. Murray will need to convince these luxury leaders that Matches will not diminish their brand image.
Transitioning from selling sneakers to the luxury market will require Ashley to prove that he is committed to upholding the image and standards associated with luxury. He will need to demonstrate that he has traded in his tracksuit for the elegance of Tiffany jewels.
Useful links:
1. [Matches](https://www.matchesfashion.com/) – Official website of Matches, the luxury online retailer.
2. [Frasers Group](https://www.frasersgroupplc.com/) – Official website of Frasers Group, the retail conglomerate led by Mike Ashley.
