Online clothing retailer Asos has launched a joint venture with Heartland, whereby Heartland will buy the Topshop and Topman brands from the firm.
Asos bought the two brands, along with Topman, Miss Selfridge and HIIT, in 2021 from Philip Green’s collapsed Arcadia group for £265m (excluding stock).
The joint venture will grant Asos “certain design and distribution rights” for the Topshop and Topman brands in return for a royalty fee, enabling it to continue marketing and selling the brands online.
José Antonio Ramos Calamonte, chief executive officer, ASOS, said: “We’re pleased to be making this announcement today which is an important step in ASOS’ continued transformation.
“The joint venture and the launch of the refinancing will accelerate our strategy to both offer customers the best and most relevant product and to turn ASOS into a company that delivers sustainable, profitable growth.”
“Topshop and Topman have made good progress since we acquired the brands in 2021. The new joint venture with Heartland is testament to the brands’ potential and the partnership will help bring Topshop and Topman to more customers globally.”
He added that the deal will create “new opportunities, both online and offline”.
Asos said the deal is expected to have a £10 to £20m negative impact on earnings before interest, tax, depreciation and amortisation (EBITDA) but to be “increasingly EBITDA accretive over time”.
Heartland, through its subsidiary Aktieslskabet, will hold a 75 per cent interest in the joint venture worth £135m. Asos will hold the remaining 25 per cent.
Heartland is an investment and holding company representing the interests of the Holch Povlsen family, and their family business Bestseller. It holds a 28 per cent stake in Asos.
For the full year, ASOS expected adjusted EBITDA at the top end of consensus estimates, sales slightly below guidance, and said that all other guidance as set at the end of the 2023 year-end remained unchanged.
Asos also announced an amendment and extension of its existing facilities agreement with Bantry Bay Capital to May 2027 with an option for a 12 month extension.
The group also announced a refinancing. It said it would launch an offering of £250m convertible bonds due 2028 and repurchase part of its outstanding £500m 0.75% convertible bonds due 2026.