Boohoo (BOO) has acquired the online parts of fashion brands Karen Millen and Coast out of administration, as it looks to expand its online fashion model into new demographics.
Boohoo will pay £18.2m for the brands but, notably, it is only buying the online businesses and associated intellectual property. The high street stores will cease to trade and their 1,100 associated staff were not part of the purchase. Roughly 125 Karen Millen and Coast employees have joined Boohoo under the deal.
Boohoo chief executive John Lyttle said: “Our plan is to run these brands as pure-play online brands”, adding that they would expand the group’s reach into the 25-45-year-old demographic.
The deal was funded by Boohoo’s existing cash reserves – which came in at £191m in the year to February.
Management said the deal was part of the group’s strategy to grow its multi-brand platform, bringing the group’s total number of brands to seven. When asked whether the group would look to make further acquisitions, Mr Lyttle said Boohoo would instead be focusing on the upcoming August peak trading period.
Karen Millen and Coasts’s online business generated £28m in online sales on their own websites in the year to February 2019.
Analysts at GlobalData described Boohoo as an “unlikely suitor” for the brands, citing both targets' older core demographic and reputation for quality clothes for occasions, as opposed to Boohoo’s typical strategy of high-volume sales targeted at a younger audience.
However, broker Peel Hunt argued that the brands had room to further penetrate their markets, and the £28m in online sales was seen as “fairly anaemic in relation to what Boohoo is likely to achieve”.
