Boohoo Group acquires all intellectual property assets of Debenhams Retail Limited

Boohoo Group plc (LON:BOO), a leading online fashion retailer, has announced that it has acquired all of the intellectual property assets (including customer data and related business information and selected contracts) of Debenhams Retail Limited from its joint administrators, for £55 million (plus VAT) in cash.

Debenhams is a long-standing and leading UK fashion and beauty retailer with high brand awareness, and an established online platform with approximately 300 million UK website visits per annum. This makes it a top 10 retail website in the UK by traffic.

The Transaction represents a fantastic opportunity to grow the Group’s target addressable market and increase the share of wallet opportunity through a new capital light and low risk operating model that is complementary to the Group’s highly successful direct-to-consumer multi-brand platform. 

The Group intends to rebuild and relaunch the Debenhams platform, helping further the Group’s stated ambition to lead the fashion eCommerce market, and grow into new categories including beauty, sport and homeware through:

●     Marketplace: Creating the UK’s largest marketplace across fashion, beauty, sport and homeware. The Group plans to expand the range of products sold via the Debenhams marketplace by maintaining existing marketplace brand relationships and adding new brands over time. The relaunched marketplace will also provide an exciting new route to market for the Group’s existing brand portfolio

●     Beauty: The Group will continue to operate the current wholesale model, but will also look to add new beauty brands via the marketplace model

●     Own brand fashion: Debenhams’ own fashion brands will be absorbed into boohoo’s current brand portfolio and sold via the core Debenhams site and their own pureplay websites

John Lyttle, CEO, commented:

The acquisition of the Debenhams brand is an important development for the Group, as we seek to capture incremental growth opportunities arising from the accelerating shift to online retail. We have developed a successful multi-brand direct-to-consumer platform that continues to disrupt the markets that we operate in. The acquisition represents an exciting strategic opportunity to transform our target addressable market through the creation of an online marketplace that leverages Debenhams’ high brand awareness and traffic through the development of beauty and fashion partnerships connecting brands with consumers.”

Mahmud Kamani, Executive Chairman, commented:

“This is a transformational deal for the Group, which allows us to capture the fantastic opportunity as eCommerce continues to grow. Our ambition is to create the UK’s largest marketplace. Our acquisition of the Debenhams brand is strategically significant as it represents a huge step which accelerates our ambition to be a leader, not just in fashion eCommerce, but in new categories including beauty, sport and homeware.”

Strategic Rationale

1.    Unlocking Debenhams’ online opportunity

●     Transforming Debenhams through the development of an exciting online marketplace, capitalising on the sector’s structural shift to online

●     Utilising Debenhams’ existing pureplay brands and extensive third party brand relationships as the foundations for the marketplace

●     Further developing new third party fashion and beauty partnerships, giving brands control over the range of products offered on the marketplace and access to Debenhams’ significant customer base

●     Growing Debenhams’ product categories and expanding its supplier partnerships

2.    Boohoo’s entry into the beauty, sports and homeware market

●     Entering the beauty market at scale – Debenhams is one of the UK’s leading prestige beauty retailers across make-up, skincare and fragrance

●     Debenhams has 6 million beauty shoppers and 1.4 million Beauty Club members

●     Opportunity to extend partnerships into new categories such as sport and homeware

3.    Enhanced revenue growth opportunities across the Group

●     Significant opportunity to leverage Debenhams’ customer database and develop the platform for international markets in the future

●     Debenhams offers an additional route to market for the Group’s existing brands

●     Extending the Group’s brand portfolio through the acquisition of Debenhams’ pureplay own brands including Maine, Mantaray, Principles and Faith

Key Transaction Details

Debenhams is expected to relaunch on the Group’s platform in Q1 FY22.  In order to allow for the winding down of Debenhams’ operations, Debenhams will continue to operate its website for an agreed period before the relaunch on the Group’s platform and a licence has been granted to allow for the winding down of Debenhams’ retail stores (when they are in a position to re-open) for an additional period.  The Transaction will be financed through the Group’s existing cash balance, which stood at £386.9m on 31 December 2020.  The Group will only be acquiring the brands and associated intellectual property rights – the Transaction does not include Debenhams’ retail stores, stock or any financial services. 

Financial Information

In Debenhams’ most recent financial year to 31 August 2020, its online business generated unaudited online net revenues of approximately £400 million, via the following operating models:

●     Marketplace: Approximately 25% of the online revenue (primarily fashion and homewares)

●     Beauty: Approximately 20% of the online revenue via a traditional wholesale model

●     Own brand fashion: Approximately 25% of the online revenue (key brands include Maine, Mantaray, Principles and Faith)

●     Wholesale inventory: Approximately 30% of the online revenue (bought from third-party brands, including fashion, sport and homeware), which will not continue to operate under the Group’s ownership

The Transaction is not expected to contribute to the Group’s revenues over the remaining five weeks of the current financial year (FY 2021), and is expected to incur modest start-up losses. The Group will provide a further update at its Full Year results in early May 2021.

Other Financial Information

In its most recent financial year to 31 August 2020, Debenhams generated unaudited Gross Transaction Value of £1.524 billion and unaudited EBITDA of £12.7 million. These figures include all revenues and associated costs for store-based and international operations.

Investor and analyst audio webcast

Boohoo Group plc will today host an audio webcast and conference call for analysts and investors at 8.30am GMT via the following link:

Audio webcast:

UK dial-in:                           +44 (0)330 336 9411

Participant Pin Code:         9203086

Click to view all articles for the EPIC: ,
Or click to view the full company profile:
    Share on facebook
    Share on twitter
    Share on linkedin
    boohoo Plc

    More articles like this

    AFC Energy

    AFC Energy: Feedback post Capital Markets Event

    AFC Energy plc (LON:AFC) hosted its maiden Capital Markets Event yesterday, giving an excellent summary of its progress in the last year and its prospects. The company is making good progress in commercialising its EV charging product alongside

    boohoo Plc

    Boohoo Group: FY21 Results

    Boohoo Group plc (LON:BOO) has announced results for the 12 months ended 28 February 2021, reporting a strong finish to the year, with performance ahead of ZC’s forecasts, driven by strong momentum in both the UK and USA

    AFC Energy

    AFC Energy hosting virtual Capital Markets event today

    AFC Energy plc (LON:AFC), a leading provider of hydrogen power generation technologies, will today host a virtual Capital Markets Event for investors and analysts at 2pm BST. To view the webcast, investors should join using the following link:

    boohoo Plc

    Boohoo Group revenue up 41% to £1.745 billion

    Boohoo Group plc (LON:BOO) has announced its final results for the year ended 28 February 2021.   2021 2020 Change   £ million £ million   Revenue 1,745.3 1,234.9 +41% Gross profit 945.2 666.3 +42% Gross margin 54.2%


    Inchcape: Update to forecasts

    Inchcape plc (LON:INCH) delivered better than expected Q1 results last week and is showing signs of a broad-based recovery across a number of geographies. The Group recently announced its decision to right-size its Russian retail operations with a


    Inchcape results ahead of expectations

    Inchcape plc (LON:INCH), the leading independent global automotive distributor, today released its Q1 Trading Update covering the period from 1st January to 31st March 2021. ·    Group revenue £1.9bn: up 2% on an organic basis, and down 3% reported ·    Continued