Proactive Investors - Analysts have given a positive reaction to the sale by Frasers Group PLC of Missguided to online retailer Shein.
AJ Bell’s Russ Mould thinks it could prove to be a strategically important move for the UK retailer, providing a foot in the door to a potential close working relationship with the Chinese fashion seller.
“Shein has become a major force in online retail and is one of the key reasons why the likes of ASOS (LON:ASOS) and Boohoo (LON:BOOH) are struggling,” Mould noted.
He thinks Frasers could feasibly be interested in a distribution deal whereby it can sell its products on Shein’s platform, while also using its Sports Direct (LON:FRAS) and Flannels stores as a potential return hub for the Chinese partner.
“The more people coming through its doors, the more opportunities it has to try and sell its products,” Mould said.
Shore Capital explained the move is particularly noteworthy because it marks Shein's first acquisition of a British brand, aligning well with its focus on the UK as one of its fastest-growing markets.
It too thinks that a strategic partnership would complement both parties' capabilities and reach.
Frasers would benefit from the footfall generated by Shein shoppers, while Shein would leverage Frasers' physical stores as an entry into traditional retail channels, the broker noted.
ShoreCap also believes this development has the potential to create a ripple effect across the UK retail sector.
“At a time when fast fashion is undergoing significant changes, with online pure plays already losing ground against Shein, this partnership could mark a significant moment in propelling Frasers’ investment case,” it said.
“We see this as the potential for Frasers to capitalise on Shein's footfall and cross-sell its ranges to younger female demographics, thereby adapting to the evolving retail landscape and fortifying its market position”, ShoreCap said.