Matchesfashion, the online luxury fashion retailer, is facing administration after its owner, Frasers Group, decided to stop funding the loss-making business. Frasers Group, which bought Matchesfashion for £52 million in December 2023, said that the retailer had consistently missed its targets and owed payments to many suppliers, leading to a loss of confidence and support from the brands. Frasers Group said that it remained committed to the luxury market, but that Matchesfashion required too much change and investment to be viable. The administration process, which will be handled by Teneo, puts hundreds of jobs at risk and casts doubt on the future of the retailer, which was once valued at £1 billion.
The Rise and Fall of Matchesfashion
Matchesfashion was founded in 1987 by Tom and Ruth Chapman, who opened a small boutique in Wimbledon, London. The retailer expanded to several physical stores and launched its online platform in 2007, offering over 500 brands to customers in 170 countries. Matchesfashion attracted investors such as Apax Partners, which bought a majority stake in the retailer for £800 million in 2017, valuing it at £1 billion. The retailer also partnered with celebrities and influencers, such as Alexa Chung and Victoria Beckham, to boost its profile and appeal.
However, Matchesfashion’s fortunes changed in recent years, as it faced increasing competition from other online luxury platforms, such as Net-a-Porter and Farfetch, as well as the impact of the Covid-19 pandemic, which disrupted the supply chain and consumer demand. Matchesfashion also suffered from management turmoil, as it changed its CEO three times in two years, and faced allegations of a toxic work culture and discrimination. The retailer’s performance deteriorated, as it reported a pre-tax loss of £5.9 million for the year ending January 2020, compared to a profit of £19.6 million the previous year.
The Frasers Group’s Acquisition and Decision
Frasers Group, the retail conglomerate owned by Mike Ashley, acquired Matchesfashion for £52 million in December 2023, as part of its strategy to elevate its portfolio and enter the luxury market. Frasers Group, which also owns Sports Direct, House of Fraser, and Flannels, said that it saw potential in Matchesfashion and that it would support its growth and development. However, Frasers Group soon realized that Matchesfashion was in worse shape than expected, and that it would need significant restructuring and funding to turn it around. Frasers Group said that Matchesfashion had continued to make material losses and that it had failed to pay many of its suppliers, resulting in a loss of trust and cooperation from the brands. Frasers Group said that it was not willing to provide the money needed to keep the business going, and that it had informed the directors of Matchesfashion of its decision to put the retailer into administration.
The Implications and Consequences of the Administration
The administration of Matchesfashion will have serious implications and consequences for the retailer, its employees, its suppliers, and its customers. The administration process, which will be overseen by Teneo, will involve finding a buyer or a rescue deal for the retailer, or liquidating its assets and winding up the business. The administration will also put hundreds of jobs at risk, as Matchesfashion employs around 700 people, according to its latest accounts. The administration will also affect the suppliers and the brands that work with Matchesfashion, as they may not receive the payments they are owed, or may lose a distribution channel for their products. The administration will also impact the customers of Matchesfashion, as they may face delays or cancellations of their orders, or lose access to their favourite brands and products.
