Frasers Group’s acquisition of Matches has resulted in significant financial setbacks for the company.
- The retail giant reported a 13.1% rise in adjusted profit before tax to £544.8m for the year.
- Despite the profit rise, the company’s profit before tax declined by 20.5% to £507m.
- The acquisition of Matches led to a £12.5m loss due to trading and disposal costs.
- Frasers Group acquired Matches for £51.9m, later putting it into administration due to its trading losses.
Frasers Group has recently faced notable financial challenges stemming from its acquisition of Matches, a luxury retailer. The company agreed to purchase Matches on December 20th for £51.9 million. However, this venture has not gone as planned, as disclosed in Frasers Group’s latest financial results.
In a seemingly positive development, Frasers Group reported a 13.1% increase in adjusted profit before tax, reaching £544.8 million for the year ending April 28, 2024. Despite this increase, the company’s profit before tax experienced a decline, dropping 20.5% to £507 million, compared to the previous year. This reduction in profit is partly attributed to the £12.5 million loss incurred from the Matches acquisition.
The loss from Matches is composed of an £8.4 million trading loss incurred between December 20th and March 8th, as well as a £4.1 million loss upon disposal. This latter figure represents the difference between the value of the net assets at the time of administration and the recoveries expected from those assets.
Despite having provided substantial financial backing to Matches following acquisition, Frasers Group found that the ongoing trading losses of Matches were substantial. The required further funding was deemed by Frasers to be far beyond what was considered viable.
On April 28th, Frasers took control of Matches’ brand names and intellectual property for £20 million. This move reduced the financial obligations of Matches towards Frasers. However, operations could not continue as desired, leading to the closure of Matches’ website and physical stores in Mayfair, Marylebone, and Wimbledon.
The acquisition of Matches has proven financially detrimental for Frasers Group, emphasizing the risks associated with such ventures.
