Cut-price deal could result in closure of retail chain’s remaining department stores
Online fashion retailer Boohoo is set to acquire the Debenhams brand in a cut-price deal that will result in the closure of the group’s remaining department stores, according to two people with knowledge of the transaction. They said a deal could be announced in the next few days.
Debenhams went into administration last month after the enforced store closures that were part of the response to the coronavirus pandemic wreaked havoc on the group’s already-fragile finances. Sale processes both before and after the insolvency failed to find a buyer, and the company is in the process of being liquidated.
As was the case with its previous acquisitions, such as those of Karen Millen, Coast and Oasis, Boohoo is acquiring only the Debenhams brands and its fashion sub-brands, such as Mantaray and Principles. The company is keen to expand beyond its core market of teenage and twenty-something women.
Debenhams also has a substantial beauty business, an area in which Boohoo has in the past expressed interest. Rival Asos has developed a successful beauty business over the past year, and Next is making inroads in the sector.
The purchase price is expected to be about £50m, reflecting the last-minute nature of the deal, but it will salvage some value for the investment companies that bought Debenhams in a prepack administration in 2019, including Silver Point, Golden Tree and Barclays, Boohoo had been considered a likely acquirer of Topshop, regarded as the most marketable part of Philip Green’s Arcadia empire, but several observers said that its initial bid had been too low and it was no longer considered a frontrunner.
The transaction is likely to mean that the rest of Debenhams, which still employs more than 10,000 people, will now be broken up, with perhaps a handful of takers for some of its better-located department stores. Potential bidders for those include Frasers, the fashion and sportswear group controlled by Mike Ashley, which has repeatedly expressed interest in acquiring all or parts of Debenhams. It was rebuffed in 2019 and again last year.