Online fashion giant, Boohoo, has acquired the brand and website of Debenhams in a £55 million deal, which does not include any of the historic department store’s 118 high street stores or its 12,000 strong work force.
The executive chairman of Boohoo, Mahmud Kamani, said: “This is a transformational deal for the group, which allows us to capture the fantastic opportunity as ecommerce continues to grow. Our ambition is to create the UK’s largest marketplace.
“Our acquisition of the Debenhams brand is strategically significant as it represents a huge step which accelerates our ambition to be a leader, not just in fashion ecommerce, but in new categories including beauty, sport and homeware.”
After 242 years on British high streets, Debenhams called in administrators, FRP Advisory, in December after administrators failed to secure a rescue deal. At that point the retailer was operating from 124 stores, six of which had already been closed down permanently ahead of today’s announcement.
FRP Advisory said the deal was “”the best outcome for Debenhams’ stakeholders. This transaction will allow a new Debenhams-branded business to emerge under strong new ownership, including an online operation and the opportunity to secure an international franchise network that will operate under licence using the Debenhams name.”
This is the latest in a line of iconic retail brands to have been snapped up by Boohoo, which has already acquired the Oasis, Coast and Karen Millen brand names but not any of their bricks and mortar stores.
Debenhams is expected to relaunch on Boohoo’s web platform in early 2022, prior to which Debenhams will continue to operate its website for an agreed period. Boohoo said it would capitalise “on the sector’s structural shift to online” and that it intended to expand Debenhams’ product categories and supplier partnerships. It is funding the deal from its existing cash reserves.
When Debenhams listed on the stock exchange in 2011, investors valued it at £1.6bn. Boohoo, which was founded only in 2006, already has a stock market value of £4.4bn. Another online giant, ASOS, a front-runner to buy the Arcadia Group brands which sees no value in its high street estate, is valued by the stock market at £5bn.
Whilst lockdowns associated with Covid-19 signed the death warrant for Debenhams, the department store had been struggling for years and had already called in administrators twice since 2018, most recently in April 2020.
Boohoo was recently embroiled in a scandal about allegations of sweatshop working conditions at its suppliers’ factories in Leicestershire and undertook an independent review of its supply chain. Lawyer, Alison Levitt, examined how “well-founded” the allegations were and to what extent Boohoo had knowledge of the working conditions in its supplier factories. The allegations were made by garment workers’ campaign group Labour Behind the Label and by The Sunday Times of London.
In a statement for the review, which was published last September, Boohoo CEO, John Lyttle said: “The review has identified significant and clearly unacceptable issues in our supply chain, and the steps we had taken to address them. It is clear that we need to go further and faster to improve our governance, oversight and compliance. As a result, the group is implementing necessary enhancements to its supplier audit and compliance procedures, and the board’s oversight of these matters will increase significantly.”