The American department store chain Nordstrom has bought a minority stake in four brands owned by the British online fashion retailer Asos as it pushes to grab a share of the lucrative 20-something market.
Nordstrom will take a minority stake in the Topshop, Topman, Miss Selfridge and activewear HIIT brands, which Asos bought in March after the collapse of Philip Green’s Arcadia empire, for an undisclosed sum.
The deal is Asos’ first with a physical retailer. It will retain full creative control of the joint venture, with Nordstrom leveraging its North American customer base to drive penetration into the U.S. market through its 350 stores and websites.
Nordstrom will also have the exclusive retail rights for Topshop and Topman across North America. It has been the exclusive distributer of the duo in the U.S. since 2012. The retailer will also become the only brick-and-mortar presence for the brands worldwide.
Asos said that the joint-venture paves the way for wider collaboration between the two firms. The partners are in talks about launching a multi-channel showcase for a handful of Asos brands for Nordstrom customers. The U.S. retailer will also allow shoppers to collect and send back Asos products at its stores.
“Partnering with Nordstrom will support our U.S. strategy, allowing us to offer that to even more 20-somethings in North America,” Asos chief executive Nick Beighton said.
But, analysts at brokerage Shore Capital questioned the need to set up a joint venture with a physical retailer, fearing that Asos’ brand equity could be diluted.
“While we recognise the potential benefits of having a physical presence in the U.S., we do not see Nordstrom as the best partner for Asos. Other more traditional U.K. clothing businesses retail through Nordstrom (wholesale or concessions), but the relationship tends to be a capital-light way to increase brand awareness in the region,” they said.
“We did not think Asos needed this, given its established online presence, and we are concerned it will dilute the Asos brand equity if the customer demographics of the two businesses do not align.”
They did however indicate that some sort of deal was critical for Asos “to maintain relevance in a fast-moving and competitive space” in light of the Zalando/Sephora partnership and Boohoo’s acquisition of Debenhams.
Analysts at rival broker Peel Hunt were more upbeat, calling the venture “an excellent partnership”.
“The battle ahead for Asos is about U.S. customer recruitment and awareness, which can only be accelerated by both the Topshop tie-up and further collaboration,” they said.