Shein Buys Missguided Brand From Frasers — 2nd Update

Frasers said the transaction is for the intellectual property and trademarks of the brand. It said it will keep Missguided’s real estate and employees, who have been integrated into the wider group’s fashion division.

“Retaining the combined Frasers fashion teams whilst rationalizing our portfolio in this space to focus on fewer brands makes a lot of sense in the current climate,” Chief Executive Michael Murray said.

The Chinese group said it also signed an agreement to license the Missguided brand IP to Sumwon Studios–a joint venture between Shein and Missguided’s founder Nitin Passi–which will manage the brand. Missguided’s products and collections will be manufactured through Shein’s on-demand production model and sold on its sites and on Missguided.com as an independent brand, it said.

Sports-fashion retailer Frasers–majority owned by former Chief Executive Michael Ashley–snapped up the Missguided brand for 20 million pounds ($24.2 million) when financial difficulties forced the Manchester-based online retailer into administration in June 2022.

“The joint venture we have entered ushers in a new format of partnerships for Shein, as part of our unwavering commitment to meet customer demand,” Executive Chairman Donald Tang said.

The deal represents a rare acquisition of a Western brand by Shein, which has grown quickly in recent years selling low-cost clothing to shoppers around the world. The retailer is currently in the midst of a shift from selling its own-branded clothing online to becoming a marketplace for third-party sellers.

Frasers said the transaction has enabled further discussions with Shein around potential opportunities for collaboration across its brand portfolio.

“Frasers could feasibly be interested in a distribution deal whereby it can sell its products on Shein’s platform, while also using its Sports Direct and Flannels stores as a potential return hub for the Chinese partner. The more people coming through its doors, the more opportunities it has to try and sell its products,” AJ Bell investment director Russ Mould says in a market comment.

Shore Capital analysts Eleonora Dani and Clive Black agree, noting the sale could be a precursor to leveraging Frasers’s expansive U.K. store portfolio and enabling Shein to bridge the gap between offline and online shopping experiences.

Although it is uncommon for Shein to make an acquisition outright, it has expanded through investments. In late August it bought a stake in Sparc, operator of Forever 21, that allows Shein to sell the brand’s dresses, jeans and accessories on its website.

“You might think it an odd move to be working closely with an arch-rival. But Sparc and potentially Frasers know there is a benefit in having greater distribution reach,” Mould says.

At the time, Shein’s Tang said the company would need to bring in more third-party brands as it expands. “We can’t make everything we sell,” he said.

The deal has the potential to create a ripple effect across the U.K. sector, Shore adds.

“At a time when fast fashion is undergoing significant changes, with online [focused companies] already losing ground against Shein, this partnership could mark a significant moment in propelling Frasers’s investment case,” the investment group said.

Write to Elena Vardon at [email protected] and Joe Hoppe at [email protected]