Boohoo, Asos seek to rescue failed clothing brands online

Bloomberg

Online fashion retailers Boohoo Group Plc and Asos Plc are seeking to rescue ailing UK retail mainstay brands like Debenhams and Topshop.
Boohoo said it’s buying the Debenhams brand for 55 million pounds ($75 million). Separately, Asos Plc said it’s in exclusive talks with administrators of Philip Green’s Arcadia Group Ltd to buy the UK retailer’s Topshop brand and other labels.
Although the online retailers are seeking to revive stalwarts of the country’s shopping centres, their interest centres on e-commerce and brands like 240-year-old Debenhams may survive only on the web. That threatens the positions of thousands of employees after the UK retail industry shed more than 100,000 jobs last year.
Boohoo rose as much as 5.7% in London, while Asos gained as much as 3.5%.
Boohoo said on Monday it will acquire the Debenhams label and fashion sub-brands including Manta Ray and Principles. The modest purchase price reflects the fact that Boohoo is not buying any of the retailer’s
inventory or keeping its
124 stores. When the current
UK lockdown ends, they’ll only reopen long enough to sell remaining merchandise before closing again.
Boohoo’s last-minute swoop reflects the fast-growing online retailer’s desire to expand its offerings online beyond its
main customer base of teenage and young twenty-something women.
Debenhams, which employs 12,000 people, mainly in the stores, is one of Britain’s best-known retail brands.
The department store chain has struggled recently, weighed down by hefty rents and property taxes. Fierce competition from e-commerce in the UK has led consumers to visit stores less frequently, and the pandemic accelerated the trend. Debenhams entered administration, a UK form of insolvency, in December and is currently in the process of being liquidated. Boohoo bought the Karen Millen and Oasis brands out of insolvency in 2019.
While the Debenhams star has been waning for many years, the business still commands a large share of the beauty market and its website attracts more than 300 million visits each year, making it a top-10 online retail destination in the UK.
“This looks a sensible bolt-on acquisition,” said Greg Lawless, a retail analyst at Shore Capital, in a note this morning. “It enables Boohoo to enter adjacent markets — beauty, sports and homewares — and bolsters their share in clothing across ladies and menswear.”