Online fashion retailers Boohoo Group Plc and Asos Plc are seeking to rescue ailing U.K. retail mainstay brands like Debenhams and Topshop.
Boohoo said Monday 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 U.K. retailer’s Topshop brand and other labels.
Although the online retailers are seeking to revive stalwarts of the country’s shopping centers, their interest centers 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 U.K. 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 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 U.K. lockdown ends, they’ll only reopen long enough to sell remaining merchandise before closing again.
Last-Minute Deal
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 U.K. has led consumers to visit stores less frequently, and the pandemic accelerated the trend. Debenhams entered administration, a U.K. 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 U.K.
“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.”
Topshop Talks
Asos confirmed the talks for Topshop and some other Arcadia brands after Sky News reported that it’s the frontrunner to buy such assets from the insolvent company. A price of more than 250 million pounds ($343 million) is being discussed, according to the report.
The talks also include the Topman, Miss Selfridge and HIIT brands, according to a statement, which didn’t specify if a transaction would include any stores.
Asos wants to expand its customer base and has a strong businesses in the U.S. and Europe, where Topshop brand-recognition is high. The fashionable label has struggled in recent years since Philip Green’s once rock-solid empire faltered after the disastrous sale of his BHS department store in 2015 and as lockdowns worsened already falling sales.
Fashion retailer Next Plc and a range of other potential acquirers were previously reported to be interested in Topshop.
Any deal would be funded in cash, Asos said. There’s no certainty of a transaction, it added.
Analysts at Berenberg said Asos’s move to buy the Topshop, Topman and Miss Selfridge brands makes “good strategic sense” as they are well known among the retailer’s target customers and a “natural fit” with the rest of the business.
