The year barely started and already there are changes in the air for fashion and retail.
Fast fashion e-tailer Asos raised the ire of some subscription customers after implementing a higher minimum in order to qualify for free next day delivery. The struggling operation also partnered with Secret Sales to move its overstocks out of the Asos platform.
For matchesfashion.com, the turnaround under CEO Nick Beighton could be showing signs of progress, enough to garner additional financial support from majority owner Apax.
And the ever acquisitive Frasers Group, following on the heels of stakes in Missguided and MySale.com, is taking a greater interest in making inroads in the online channel. Frasers is now the second biggest stakeholder in N Brown.
In other news, JD Sports Fashion disclosed that its sites had been hacked, while Chinese online marketplace JD.com is slated to shut down operations in Thailand and Indonesia.
Asos raises free next day delivery minimum
“Thanks for ruining my day asos,” wrote one Twitter user.
What prompted that response? An email from fast fashion e-tailer Asos thanking the customer for being a Premier customer. In that same email, Asos said that starting Feb. 28, 2023, it will raise the minimum spend to 15 pounds ($18.48) from 10 pounds ($12.32) in order to get free next day delivery. Customers who spend less than the minimum will get free standard delivery.
“That said, if you do want to cancel your subscription, we understand—just contact customer care,” Asos said at the end of the email, seemingly inviting loyal subscription customers to opt out. Some Twitter users, outraged at the increase, said they didn’t plan to renew their subscription.
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One Twitter user commented, “It’s not ‘free’ next day delivery @asos[. W]e pay for it through an annual subscription. Rip off that you now have to spend [15 pounds] or more.”
Asos said earlier this month that total group revenue for the four months ended Dec. 31, 2022, fell 4.1 percent to 1.34 billion pounds ($1.62 billion). The company has been working to right its inventory levels, and last November said a cost-cutting strategy would put some staffers out of a job. Other strategic initiatives in 2022 include steps to minimize the impact from a significant increase in return rates from customers. Returns have been a problem faced by competitors such as Boohoo and Zara, with the latter implementing a fee of 1.95 pounds ($2.39) for returns dropped off with a third party.
Asos is working with Secret Sales to get rid of inventory, moving some of its discounted merchandise onto the British clearance marketplace. The former members-only flash sales website was acquired in March 2020 by retail entrepreneurs Chris Griffin and Matt Purt. The two pivoted to a direct-to-consumer discount model to help brands and retailers clear out overstocks.
Asos’ financial struggles reportedly have led the company to hire senior restructuring expert Scott Millar from Ankura to join its finance department.
Matchesfashion.com receives cash infusion from owner
Luxury retailer matchesfashion.com will receive 60 million pounds ($73.9 million) in new funding from majority owner Apax Capital.
The funding will be in the form of 40 million pounds ($49.3 million) in equity and 20 million pounds ($24.6 million) in debt. According to a Sky News report, the company has secured the requisite covenant waivers and extensions from all of its lenders.
Apax acquired its majority stake in 2017, with company founders Ruth and Tom Chapman retaining minority stakes. Since its acquisition, a deal that was valued at $1 billion at the time, the fashion retailer has faced some challenges particularly during the Covid pandemic.
Matchesfashion last July confirmed that former Asos CEO Nick Beighton would take on the chief executive position in August, replacing Paolo De Cesare. The new funding seems like a vote of confidence in the company’s turnaround under Beighton’s leadership.
Frasers Group on BNPL and N Brown stake
Frasers, which lowered its Hugo Boss stake last month and capped its maximum exposure to 580 million pounds ($691 million), has become N Brown’s second-biggest shareholder. A regulatory filing indicates that as of Friday, Frasers now holds a 17.88 percent stake via voting rights attached to 12.62 percent of shares and 5.26 percent through financial instruments.
The acquisitive Frasers has been an N Brown Group plc shareholder since October 2022, when it took on a 4.54 percent stake. That was followed by a second investment a month later, raising its stake to 5.04 percent.
N Brown’s main brands include JD Williams, plus-size-focused Simply Be and Jacamo, a men’s platform. It also operates the Home Essentials and Fashion World brands.
N Brown said on Jan 12 that third quarter revenues, which fell 9.2 percent, reflected a “soft and highly promotional market.” The company also said that the “well-documented cost of living pressures continued to impact our customers during Q3.”
Frasers, which is slated to acquire Saville Row tailor Gieves and Hawkes, is known for buying distressed firms—although it seems to be taking a keener interest in online retailers. Last year, it acquired bankrupt Australian luxury footwear and streetwear retailer Sneakerboy and rescued British fast fashion e-tailer Missguided after it collapsed into administration. And in November it raised its investment to a 95 percent stake in the Australian close-out platform MySale.com.
Separately, Frasers said on Tuesday that it now offers customers a Buy Now, Pay Later (BNPL) option allowing customers to pay in three interest-free installments. Shoppers can also pay over 36 months, though a 29.9 percent interest rate applies.
The credit option allows customers to borrow up to 2,000 pounds ($2,464), according to The Telegraph. Other reports indicated that Tymit, a fintech startup that counts Frasers as a 20 percent stakeholder, will process the online payments. Thepayers.com said that the BNPL service can be accessed through a new Frasers Plus app.
JD Sports Fashion sites hacked
JD Sports said its JD, Size?, Millets, Blacks, Scotts and MilletSport sites were victims of a cyberattack between November 2018 and October 2020. It believes that about 10 million customers were affected.
Because the company does not hold full payment card data, it believes that account passwords were not able to be accessed. Information that might have been accessed were customer name, billing address, delivery address, email address, phone number, order details and the last four digits of payment cards used.
“We want to apologise to those customers who may have been affected by this incident. We are advising them to be vigilant about potential scam e-mails, calls and texts and providing details on how to report these,” JD chief financial officer Neil Greenhalgh said. “We are continuing with a full review of our cyber security in partnership with external specialists following this incident. Protecting the data of our customers is an absolute priority for JD.”
Retail is one of the key sectors targeted by cyber criminals. A 2013 cyberattack involving Target Corp. is considered one of the largest instances affecting retail, exposing 41 million payment cards, as well as the contact information for about 70 million customers.
How a company handles a cyber security problem can be just as important. Shein parent Zoetop Business Company in October was hit with $1.9 million in fines to New York State for failing to “properly handle” a 2018 data breach that stole the personal information of tens of millions of customers and then lying to them about it, according to New York attorney general Letitia James. Zoetop, a Hong Kong-based company that also owns Shein sister e-tailer Romwe, allegedly downplayed the scope of the cyberattack, noting that only 6.4 million customers had been impacted. The attorney general’s office said the cyberattack compromised the contact and payment card information of 39 million Shein accounts, as well as 7 million Romwe accounts, including those belonging to more than 800,000 New York residents.
More recent criminal activity have centered on bad bots and ransomware. E-commerce fraud prevention software provider Seon in December warned retail businesses to expect more fraud attempts during the holiday period, revealing that fraudulent bot usage in 2021’s peak holiday season skyrocketed 255.3 percent.
In August, Hanesbrands said it lost some sales over a three-week period when a cyber attack impacted its global supply chain network. The ransomware attack resulted in a $100 million hit to the bottom line.
JD.com to shutter consumer operations in Thailand and Indonesia
A Reuters report said that JD.com is planning to close its e-commerce operations in Thailand and Indonesia, citing local sources.
The Chinese online marketplace is slated to end operations in Thailand on March 3, while the Indonesian business will cease at the end of the same month. To facilitate the timing of the planned closures, both websites will stop taking orders on Feb. 15.
JD.com has not provided a reason for why it is shuttering the two operations. Executives at JD.com could not be reached by press time.
Reuters said the Thailand operation was launched in 2017 with Central Group, while the Indonesian business began operations two years earlier as a joint venture with Provident Capital. The businesses also faced competition from larger players, including Alibaba Group, and from local startups.