Alteri Snaps Up 50% Missguided Stake As Boohoo Warns On Profits

Alteri Investors has acquired a 50% stake in online fast fashion retailer Missguided, with the investment coming after Missguided was reported to be seeking emergency funding back in October.

Under the terms of the deal, Alteri will take over Missguided’s existing debt and 50% of the company’s equity.

The news comes as a number of fast fashion retailers come under pressure from soaring supply chain costs and delivery issues, plus competition from giants such as China’s Shein.

In a statement the company said that the investment by the specialist European retail sector investor will provide the business with the “liquidity and support it needs to overcome short-term supply chain challenges, as well as a platform to return the business to sustainable profitability.”

The investment will be made from Alteri’s second investment vehicle, launched in August 2019, with the backing of funds managed by affiliates of Apollo Global Management Inc APO .

Two directors from Alteri will also be added to the Missguided board, while an additional executive chair with “strong retail and turnaround experience” will join.

Missguided Hit By Supply Chain Woes

Missguided was founded in 2009 as an online-only digital pure play retailer and fashion brand by Missguided founder and chief executive Nitin Passi. Today, it is a fast fashion business serving in excess of four million active, 18–30-year-old customers in over 180 countries worldwide.

In the year to March 2021 it achieved sales of $380 million, with the U.K. and U.S. its two largest markets.

After addressing short-term priorities, including restocking following recent supply chain challenges, Alteri Investors said that it will work with management to develop the strategy to transform the group’s profitability. In the medium term, the focus will shift to initiatives aimed at delivering sustainable growth.

“Earlier this year we launched a process to identify a partner to help us navigate short-term challenges but more importantly deliver on the great opportunity that exists for this brand,” said Passi. “Alteri’s deep sector expertise, proven track record and focus on driving operational efficiency make it the right partner.”

Alteri Investors founder and chief executive Gavin George said: “Alteri’s success in this process is testament to the breadth of our operational transformation capabilities and our retail sector expertise. As a digital pure-play retailer, Missguided is exposed to core markets enjoying strong double-digit growth, and the brand is very well placed to capture the opportunity that these positive market dynamics present. We are looking forward to working with Nitin and the management team to help the business achieve its considerable potential.”

Boohoo Warns On Profits Again

Last week fast fashion group Boohoo warned that full-year profits and sales will be lower than expected and shares in the online retailer plunged initially in response to its second warning in four months.

Shares have since recovered some of their lost ground and Boohoo insisted that while overall demand had grown since the first and second quarter, it was suffering from the effects of global shipping delays, spiralling costs, and soaring returns, plus disappointing sales overseas, which forced the group to slash full-year sales growth expectations to 12-14%.

This was significantly down from previous guidance of 20-25% sales growth in the year to Feb. 28. In the U.K., Boohoo said net sales were up 32% in the three months to November, compared with a year prior, thanks to “exceptional” local demand. However, returns were up 12.5% annually, and 7% higher than pre-pandemic mainly because of higher dress sales rather than casual apparel.

The acquisition of brands including Coast and Karen Millen, which sell higher ticket dresses, has amplified this trend and with many people cancelling social engagements in the U.K. because of Omicron, this issue is likely to persist.

Boohoo also owns the Debenhams, Burton, Wallis and Dorothy Perkins apparel brands.