Boohoo buys Debenhams for £55 million as it moves to selling other brands’ fashions for the first time

(PA)

Online fashion giant Boohoo today made a major strategic shift as it bought the Debenhams brand and said it would for the first time be offering its sophisticated sales platform to other brands.

Boohoo is paying £55 million to buy Debenhams from the administrators who have been running it since its recent collapse.

The deal does not include the remaining stores, which are now likely to be broken up and sold to the likes of Mike Ashley’s Frasers group.

It brings to an end the Debenhams brand on high streets, where it first appeared in London in 1778.

Up until now, Boohoo has only ever sold its own brands, which include Boohoo and PrettyLittleThing, as well as others it has bought from administrators such as Karen Millen and Oasis.

But now it is to use the Debenhams department store format to allow other brands it does not own to put their fashions and homewares onto the Boohoo online sales platform.

The move could see small fashion brands accessing Boohoo’s sophisticated digital technologies and ability to tap into huge markets.

It also extends Boohoo way beyond its fast fashion origins and into an older group of customers, plus new lines such as homewares and makeup.

Debenhams has around 300 million visits to its website a year, making it a top 10 UK online retailer already.

Boohoo said it will rebuild and relaunch the site, opening it to third party fashion brands as a “marketplace” for fashion, beauty, sport and homeware.

It will start off with Debenhams’ own brands, hopefully working with the stores’ former concession brands as well, before adding new ones to the mix.

John Lyttle, Boohoo chief executive, said: “We have developed a successful multi-brand direct-to-consumer platform that continues to disrupt the markets that we operate in.

“The acquisition represents an exciting strategic opportunity to transform our target addressable market through the creation of an online marketplace that leverages Debenhams' high brand awareness and traffic through the development of beauty and fashion partnerships connecting brands with consumers."

One of Debenhams successes in recent years has been its push into beauty, and was a major reason for Boohoo’s decision to do the deal.

It was also a major driver for Next’s earlier interest in the bidding for Debenhams. Next had partnerships on beauty with Debenhams already.

Boohoo will inherit 6 million shoppers and 1.4 million who have signed up to Debenhams’ Beauty Club.

On fashion, Boohoo will inherit Debenhams’ stable of brands for an older demographic than Boohoo is used to: Maine, Mantaray, Principles and Faith.

Boohoo will relaunch on the Boohoo technology platform in about a year’s time.

It will fund the acquisition with its existing cash reserves, currently £386.9 million. No Debenhams stock or stores are included in the deal.

In the year to 31 August 2020, Debenhams’ online business made revenus of around £400 million, a quarter of which came from its Marketplace fashion and homewares and a further quarter from its own-brand fashion.

Beauty made up about a fifth of sales, with the rest from third party brands operating wholesale through Debenhams.

The latter strand of the business will not continue under Boohoo’s ownership.

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