Frasers Group PLC's (LSE:FRAS) acquisition of Matches Fashion will provide cost-saving opportunities and will complement the group’s offering but is only a small part of Mike Ashley’s empire, analysts said.
Matches Fashion, a loss-making online luxury retailer, was picked up at the discounted price of around £50 million by the Sports Direct owner on Wednesday.
Shore Capital experts believe the deal, while “modest in the big scheme of things”, can “be complementary and synergistic”.
Frasers already owns Flannels, the luxury clothing retailer, which could prove useful when incorporating Matches into the wider assortment.
“At £52m, Matches is highly affordable for Frasers, it is a modest incremental cash out flow with associated operating losses on top. The group has a strong balance sheet,” ShoreCap said.
“We will review our Frasers' forecast post Matches alongside the New Year trading update.”
Frasers has also been topping up its stake in Asos PLC, despite the stock's poor performance post-pandemic, and while brokers are not always sure why the stakebuilding is occurring, they remain confident in Ashley’s ability to continue as an “entrepreneurial growth company”.
It should also be noted that the Matches chief executive is Nick Beighton, who was ASOS's boss for more than six years until his exit in 2021.
The UK broker rates Frasers a 'buy', with shares currently trading at around 930p.