Yahoo Finance Boohoo to buy Debenhams brand but 12,000 jobs still at risk
Online retailer Boohoo (BOO.L) has swooped to buy Debenhams brand and website for £55m ($75.4m), in a cash deal that would rescue part of the high street chain.
The deal would not include its physical presence, and therefore an excess of 118 stores and the jobs within them hang in the balance. It is estimated that 12,000 jobs are at risk at the 242-year-old department store.
Boohoo said in a press release the deal was an opportunity to transform Debenhams “through the development of an exciting online marketplace, capitalising on the sector's structural shift to online.”
It also said it was an opportunity to enter the beauty market at scale and “leverage Debenhams' customer database and develop the platform for international markets in the future.”
In Debenhams' most recent financial year to 31 August 2020, its online business generated unaudited online net revenues of approximately £400m ($549m).
John Lyttle, Boohoo CEO, said: “The acquisition of the Debenhams brand is an important development for the Group, as we seek to capture incremental growth opportunities arising from the accelerating shift to online retail.
“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.”
Mahmud Kamani, Boohoo’s executive chairman, said: “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.”
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Boohoo’s shares were trading 4.3% higher at market open in London.
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Geoff Rowley, joint administrator and partner of FRP Advisory, said: “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.”
Boohoo is the latest in a line of potential suitors that have attempted to rescue the beleaguered brand. In December last year, Debenhams went into liquidation after JD Sports confirmed it had pulled out of a possible rescue deal. Debenhams has been in administration since April 2020.
Although there will be job losses in store with the Boohoo deal, some management will be retained, and there will be some job creation within the operational side of the business.
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