Bestseller's MandM Direct buy gives it foothold in growing European discount market

It is understood that the Danish retail group, which operates the over 3,000 stores worldwide including the Jack & Jones and Vero Moda brands, believes the European discount market is a big growth opportunity with the online channel set to emerge as a major force.

A source said: “In the US, the off price market is around 7% to 8% of sales. It’s a lot smaller in Europe. Bestseller sees that as an opportunity.”

The source said that the fragmented discount market is getting “more robust and professionalised” and winners were emerging such as TK Maxx. Bestseller has identified MandM Direct, which it uses to sell marked down Jack & Jones and Vero Moda product, as a winner in this space.

Bestseller, who is also the largest shareholder in Asos and holds a stake in German etailer Zalando, said it hopes to “learn” from the MandM business.

Bestseller communication director Mogens Werge said: “We trust that the collaboration will become beneficial for both our companies in the long run, and we look forward to be working with and learning from MandM on areas like mobile sales.”

Verdict analyst Honor Westnedge said: “It’s buying into a channel with future potential. It can take this experience back into its own business. It will also give it a greater understanding of the UK consumer, a place where it only has a relatively small presence.”

The two businesses will remain separate and Werge said it would have no impact on its relationship with Asos.

The acquisition, which is subject to regulatory clearance and is expected to complete within eight weeks, puts an end to MandM Direct’ potential float.

MandM Direct, which been owned by private equity firm TA Associates since 2007, had been looking to list on AIM. The retailer was planning to use the funds to expand its business overseas and it is thought it will stick to this strategy under Bestseller’s ownership.