Boohoo buys Debenhams with promise to run the famous brand online only

Bosses at leading online fashion retailer boohoo.com, Burnley's biggest employer, have revealed their "online only" future for one-time high street favourite Debenhams, after buying the troubled brand.

By Dominic Collis
Monday, 25th January 2021, 12:14 pm
Updated Monday, 25th January 2021, 12:17 pm

Boohoo, which employs around 2,000 people at its office and warehouse at the Heasandford Industrial Estate, announced this morning that it had bought the Debenhams brand and website for £55m.

However, boohoo which has experienced huge growth with its online sales in recent years, has said it will not reopen Debenhams stores but run the brand on its online platforms only.

In the boohoo group's investor presentation, it was revealed that the UK's apparel market had declined by 15% in 2020, while in comparison the UK's online fashion market grew by 26%.

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Boohoo's Burnley base

Up to 55% of fashion products are now bought online, up from 33% previously.

The 242-year-old Debenhams chain was already in the process of closing down, after administrators failed to secure a rescue deal for the business.

John Lyttle, boohoo chief executive, 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.

"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.”

Meanwhile, boohoo is expected to take its first steps into the beauty, sports and homeware markets, taking advantage of Debnhams's reputation as one of the UK's leading beauty retailers.

In Debenhams’ most recent financial year to August 31st 2020, its online business generated unaudited online net revenues of approximately £400 million, via the following operating models:

● Marketplace: Approximately 25% of the online revenue (primarily fashion and homewares)

● Beauty: Approximately 20% of the online revenue via a traditional wholesale model

● Own brand fashion: Approximately 25% of the online revenue (key brands include Maine, Mantaray, Principles and Faith)

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.”

Boohoo has attracted headlines of the wrong sort in recent years, notbaly following a Channel 4 Dispatches documentary in 2019 which alleged poor working practices in its Burnley warehouse.

In June, 2019, the Burnley Express revealed that the company had been described as "shameful" by union Usdaw (Union of Shop, Distributive and Allied Workers) after claims it had been ignored when bosses refused to meet union representatives.

Usdaw has today called for an urgent meeting with Debenhams' administrators, urging them to treat staff with "fairness and dignity".

The administrators of Debenhams UK, FRP Advisory, said in a statement today: "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."