Frasers Group will take Match Fashion into administration, just over two months after the retail giant bought the struggling luxury e-tailer for £52 million ($66.6 million). . fashion business confirmed.
Sky News reports that Frasers Group initially acquired Matches Fashion (rebranded to Matches late last year) to strengthen its position in the luxury goods sector, but some brands have been unable to make payments for months. Since he has not received the request, he has begun to cut ties with Matches.
“Matches management has sought to find ways to stabilize the business, but restructuring the business will require significant changes and the ongoing funding needs will far exceed what the group expects. “It has become clear that this is 'viable',” Frasers Group said in a statement. “In light of this, Frasers has been informed that the directors of Matches have taken the decision to place Matches Group into administration. Frasers remains fully committed to the luxury goods market and its brand partners. ”
It's a disappointing ending that would have been unthinkable in previous matches. Founded in the late 1980s by Tom and Ruth Chapman as a brick-and-mortar London store, Matches was once a profitable company known for its carefully selected selection of emerging brands. He eventually went online in 2007, launching a storefront and app, and has grown to stock more than 500 top luxury brands, including Balenciaga and Gucci.
In 2017, private equity firm Apax Partners acquired Match for a reported $1 billion valuation, and by 2019 the company's sales had peaked at £431 million. But when the pandemic hit in 2020, Matches' losses quickly began to mount. It faced increased competition from e-commerce rivals such as Farfetch, Net-a-Porter and Mytheresa, and struggled to survive lockdown restrictions. Apax Partners has also poured millions of dollars into improving Matches' backend operations and user experience on the site.
After four CEO changes in four years, the company hired former ASOS CEO Nick Beighton in 2022 to grow the business. Beighton has overhauled the company's management team, bringing in industry veterans from Farfetch and Frasers Group as chief commercial officer, chief financial officer and chief operating officer. He also increased the number of brands offered on the platform and introduced a rental service.
However, these efforts did little to improve the company's fortunes. The match ended its 2023 financial year with a loss of £40m based on earnings before interest, tax, depreciation and amortization, up from £25m in the previous year. Sales for the same period also fell to £380m.
Matches' disastrous outcome is the harshest outcome so far of the luxury e-commerce industry's continued woes. Retailers such as Farfetch and Net-a-Porter have gone from industry darlings to cautious positions under discount pressure from ballooning digital customer acquisition costs and eroded margins. Perhaps most consequential, luxury brands encourage consumers to buy directly on their e-commerce sites, putting the brands themselves in direct competition with platforms like Matches and increasingly reducing their wholesale presence. I'm sure he's letting it happen.
Farfetch, a London-based company that connects luxury boutiques to its marketplace and provides e-commerce software to brands and retailers, narrowly avoided bankruptcy when it was acquired by South Korean e-commerce giant Coupang in December last year. Ta. In February, the company's founder Jose Neves and other executives exited the business. Key brand partners like Gucci have stopped selling on the company's marketplace, confirming fears that Farfetch would lose value under Coupang's ownership.
Frasers Group's decision to close Match also highlights the growing impatience of investors once eager to pour money into luxury e-commerce. Other pioneering luxury e-tailers are at risk of a similar fate. Swiss luxury conglomerate Richemont tried to sell Yoox-Net-a-Porter to Farfetch before it went into trouble. The fate of YNAP, which remains Richemont's loss leader, is also at risk as the company continues to look for a buyer.
