Online fashion retailer Boohoo has agreed to buy parts of failed UK department store Debenhams, including all of its in-house brands and websites but not the physical stores.

WHO: Founded in 1778, Debenhams is one of the world’s oldest department stores; at one time the group had more than 200 large stores across 18 countries and partnerships with some of the world’s best-known designers, including Jasper Conran and Julien Macdonald.

Manchester-based Boohoo was founded by Carol Kane and Mahmud Kamani in 2006, growing from three employees to a business with sales of more than £1.2 billion last year.

WHY: In May 2020 Boohoo raised £200 million to fund possible acquisitions resulting from the COVID crisis. The business previously picked up the assets of distressed rivals Oasis, Warehouse, Karen Millen, and Coast, while consolidating its stake in Pretty Little Thing.

Analysts say the acquisition of Debenhams’ website will take Boohoo to a new level, helping it appeal to older shoppers and giving access to new markets including beauty, homewares, and sportswear.

IN THEIR OWN WORDS: Geoff Rowley, Joint Administrator and Partner of FRP Advisory, said, “We are pleased to have secured the future for this great brand, and to have created the opportunity for a new Debenhams-branded business to emerge in a different shape beyond the pandemic. I expect that the agreement with boohoo may provide some job opportunities but we regret that this outcome does not safeguard the jobs of Debenhams’ employees beyond the winding down period. We are very grateful that they have worked tirelessly through this very challenging period and will continue to support the closing down sale. I’d also like to thank the management team, who have worked very hard throughout to protect the business and support us in delivering the best outcome for stakeholders.”

Boohoo Executive Chairman 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.”

“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 license using the Debenhams name,” he added.

DETAILS:

• Boohoo has acquired all of the intellectual property assets, including customer data, related business information, and selected contracts of Debenhams from its administrators for £55 million ($75.4 million).
• Boohoo will not take on Debenhams’ 124 physical stores or its staff.
• In December Debenhams began the process of closing down, putting 12,000 jobs at risk after administrators failed to secure a rescue deal for the business while they continued to seek offers for all or parts of the business.
• Debenhams is expected to relaunch on Boohoo’s web platform later this year, but Debenhams will continue to operate its website for an agreed-upon period.
• The Debenhams’ online business is one of the top retail websites with revenue of £400 million a year and 300 million visitors.
• The retailer has struggled for years as sales stagnated and it struggled to deal with the debts built up under private equity ownership. With falling profits and rising debts, the retailer called in administrators twice in two years, most recently in April after pandemic shutdowns made the situation untenable.
• Boohoo has plenty of money to pull off similar deals and says it has £387 million of cash left to fund further acquisitions.