Boohoo to sell its brands in Debenhams stores in Middle East

The online fashion retailer Boohoo has struck a deal with Kuwait’s Alshaya Group to sell its brands in franchised Debenhams stores and online in the Middle East. Alshaya, which already holds the franchise to operate Debenhams stores in the region, will have exclusive rights to operate its shops and websites in Kuwait, Saudi Arabia, United Arab Emirates, Bahrain, Egypt, Oman and Qatar. Boohoo, known for its fast-fashion dresses and going-out clothes, bought the Debenhams brand and website out of administration for £55m in January, after the 243-year-old chain collapsed in 2020. All Debenhams stores have since disappeared from the UK high street but it lives on in shopping centres across the Middle East. Boohoo’s brands will be available in Debenhams stores in the region from the autumn, and online from early next year. Boohoo’s chief executive, John Lyttle, said the deal was a further step in the integration of Debenhams into the group. “The Debenhams brand has been popular in the region for a number of years so this is a great opportunity to build on the existing brand awareness, while expanding the product ranges and brands available to customers,” he said. “It also offers a new route to market for brands within the Boohoo group, raising their profile in a growing new market.” John Hadden, the chief executive of Alshaya Group, said Debenhams was already a well-loved brand across the Middle East. “We look forward to enhancing customer choice by bringing exciting new fashion brands to the region and by expanding the Debenhams brand online,” he said. Debenhams was one of many former high street stalwarts snapped up by Boohoo during the pandemic. It now owns brands including Karen Millen, Coast, Warehouse and Oasis, and acquired the Dorothy Perkins, Wallis and Burton brands that were previously part of Sir Philip Green’s collapsed Arcadia fashion empire. The company said it had 18 million active customers across all its brands globally at the end of February. Boohoo has enjoyed booming sales during the pandemic as shoppers shrugged off revelations about treatment of workers in factories making its clothing in the UK and overseas. News of the Alshaya deal comes days after Boohoo’s online rival Asos announced it had reached an agreement with the US department store chain Nordstrom to sell Topshop clothing in its 350 stores and on its website. Asos bought the Topshop, Topman, Miss Selfridge and activewear HIIT brands in March after the collapse of Arcadia.

The Gaurdian

• 13 Jul, 2021

Boohoo buying Debenhams: a changing of the guard in retail

24 Jan, 2021

Deal by 15-year-old online upstart shows how Covid crisis has further shifted sales away from high street The symbolism is stark: a venerable 243-year-old department store chain acquired by a 15-year-old online upstart. Debenhams will disappear from British high streets after its sale to Boohoo, swallowed by a company that thrives in the world of fast fashion and has become mired in controversy in the process. Boohoo has drawn criticism for poor working conditions in its supply chain but continues to make strong sales growth as it feeds a voracious consumer appetite for affordable fashion that responds quickly to shifts in taste and style. The Topman Topshop store in BrightonThe Topman Topshop store in Brighton. Asos has bought the Topshop, Topman and Miss Selfridge brands from failed retail group Arcadia in a deal said to be worth £295m. ASOS buys Topshop, Topman and Miss Selfridge brands, UK - 01 Feb 2021 Asos in talks to buy Topshop, Topman and Miss Selfridge Read more The £55m deal also marks a changing of the guard in UK retail prompted by a radical acceleration towards buying clothes, beauty products and homewares online during the pandemic. First launched in 2006, Manchester-based Boohoo has grown from a three-employee operation to a business with sales of more than £1.2bn last year and a 5,000-strong workforce. Sales jumped 40% in the run-up to Christmas as shoppers shrugged off revelations about treatment of workers in factories making Boohoo’s clothing in the UK and overseas. An investigation by the Guardian found that factories in Leicester making the company’s clothes were failing to pay workers the minimum wage and were putting the health of staff at risk during lockdown. Sir Brian Leveson, who led the phone-hacking inquiry, was drafted in to lead change at Boohoo after a damning independent review, which found that media reports of poor conditions in the company’s supply chain were “substantially true”. The Boohoo co-founder Mahmud Kamani said this month that he was proud of the speed at which his team had reacted to the supply chain scandal. But Leveson said a clean-up of the retailer’s supply chain had a “long way to go”. The issues at factories are not the only reason Boohoo has drawn criticism. Shortly after unveiling the record profits last year, Boohoo announced a controversial scheme under which its bosses could receive a £150m bonus if the company’s shares rose by two-thirds over three years. Its co-founders Carol Kane and Kamani would receive two-thirds of the payout. In May last year, Boohoo raised £200m to buy up brands and has already taken advantage of rivals’ difficulties to snap up Oasis, Warehouse, Karen Millen and Coast. It also consolidated its stake in Pretty Little Thing, giving Mahmud’s son Umar Kamani and his business partner, Paul Papworth, more than £260m for their 35% stake. The Debenhams deal is the latest in this consolidation campaign. The long-troubled department store chain has been on the radar of would-be buyers for some time. It began looking for a rescue bidder last summer after calling in administrators twice in a year. Founded in 1778, Debenhams is one of the world’s oldest department stores but has been brought down after being loaded with debt by a force in modern finance: private equity. First listed on the London Stock Exchange in the 1920s, at one time the group had more than 200 large stores across 18 countries and partnerships with some of the world’s best-known designers, including Jasper Conran and Julien Macdonald. But in recent years sales have stagnated as it struggled to cope with heavy debts built up under private equity ownership. In 2003 the group was taken over by a private equity consortium. The trio of funds, TPG, CVC Capital and Merrill Lynch, collected £1.2bn in dividends in less than three years. In 2005, 23 shops were sold for £495m, as part of an effort to pay down debts linked to the buyout. Debenhams leased the stores back, on expensive rent deals up to 35 years in length. As it struggled with those long leases and heavy debts, Debenhams lacked resources to improve the appeal of its ageing stores and was slow to shift towards selling online. While some of its in-house brands remain quite large, growth has stalled as they have not been updated sufficiently and some rely on designer names that were considered old hat a decade ago. Despite that, Debenhams’ online business takes £400m a year from 300 million visitors, making it one of the top retail websites in the UK. Analysts say the acquisition of Debenhams’ website will take Boohoo to a new level, helping it appeal to older shoppers and giving access to new markets including beauty, homewares and sportswear. Boohoo hopes to use its existing systems to take Debenhams brands such as Principles, Maine and Mantaray overseas, and improve their distribution in the UK. The company also wants to set itself up as a marketplace – similar to Amazon or Zalando – selling third-party brands for the first time using Debenhams’ existing relationships. Andrew Wade, an analyst at the stockbroker firm Jefferies, said Boohoo had “bought a lot of asset for £55m” if Debenhams’ relationships with brands were added to its expertise in beauty, homewares and sportswear. But the permanent closure of Debenhams’ remaining 124 stores will leave enormous gaps on high streets around the country and the loss of thousands of steady jobs, the majority of which were held by women. Meanwhile, Boohoo has plenty of money to pull off similar deals and says it has £387m of cash left to fund further acquisitions. The impact of coronavirus on the high street will produce many more targets.

Boohoo to sell its brands in Debenhams stores in Middle East

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