31st Aug 2023 13:28
(Alliance News) - Sports Direct owner Frasers Group PLC "quietly" upped its stake in online fashion retailer boohoo Group PLC on Thursday, as it continues to invest in troubled firms.
"With many people focused on finishing up their summer holiday or making sure they've got everything ready for their children returning to school, some dealmakers have taken advantage of the relatively quiet market conditions to pick up shares," said AJ Bell's Russ Mould.
Frasers upped its stake in boohoo to 9.1% on Thursday, from 7.8% previously. On Monday, it had upped its stake in Asos PLC to nearly 20%.
"Both online fashion businesses boohoo and Asos have suffered share price declines over the past year, arguably providing an attractive opportunity to buy more shares at a discount," interactive investor's Victoria Scholar pointed out.
Shares in Asos were up 12% to 454.95 pence each in London on Thursday afternoon, but in the last 12 months the stock is down 35%. boohoo has followed a similar trajectory. Its shares were up 5.5% to 34.99p on Thursday, but over the last year the shares are down 16%.
Frasers, however, has not seen the same decline and has been faring well more recently. Its shares were up 1.5% to 808.50p on Thursday and are up 0.4% over the past 12 months.
boohoo and Asos have had a difficult year, as shoppers returned to the high street post-pandemic.
"More people have gone back to shopping on the high street since the end of the pandemic, preferring to try on clothes before buying rather than ordering them blindly off the internet. That's hurt online-only sellers like Boohoo," explained AJ Bell's Mould.
"Furthermore, the fast fashion business has come under scrutiny as more people make ethical considerations and try to avoid buying items that might be cast away after one use."
In boohoo's financial year, which ended February 28, it swung to a pretax loss of GBP90.7 million from a profit of GBP7.8 million the previous year while revenue slipped by 11% to GBP1.77 billion from GBP1.98 billion before.
Fraser has previously developed a reputation for rescuing struggling firms. House of Fraser, Evans Cycles and Jack Wills are among the brands it has rescued from financial mire.
Meanwhile, Scholar said that Frasers has been buying staked in several retail businesses as "it looks to position itself as a consumer platform for the world's best brands to provide a 'world-leading retail ecosystem'."
By Sophie Rose, Alliance News reporter
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