Retail

Boohoo in talks over remaining Arcadia brands


Boohoo said it had entered exclusive talks with Arcadia’s administrators over the acquisition of Burton, Dorothy Perkins and Wallis, a deal that would threaten thousands of jobs and could mark the final stage in the break-up of Philip Green’s once-mighty fashion empire.

In a brief statement just days after Boohoo confirmed the acquisition of the Debenhams department store group, it cautioned that the discussions “may or may not result in agreement of a transaction”.

As with previous acquisitions, the online retail group will not be taking any of the stores or concessions, meaning more heavy job losses among Arcadia’s 13,000-strong workforce can be expected. According to documents circulated by administrators Deloitte, the three brands occupy 216 units between them, including a large number of shared stores.

They also have a number of concession and marketplace relationships that Boohoo may opt to terminate. These include selling through rival fashion platforms such as Asos, Very and Zalando as well as in branches of Tesco.

News of the exclusive talks was first reported by Sky News, which put the likely acquisition price at about £25m.

Boohoo, over the past 18 months, has become an opportunistic acquirer of brands that have run into trouble and would extend its reach beyond its core market of young trend-conscious female buyers.

The company snapped up Karen Millen and Coast in August 2019, and bought Oasis and Warehouse last June.

The acquisition of Burton, a menswear brand with more than a century of heritage and annual sales of £129m, would extend its limited reach in menswear. Its existing BoohooMAN brand accounts for less than 10 per cent of group sales.

Andrew Wade, analyst at joint house broker Jefferies, said that while the brands were not viewed as the jewels in the crown of Arcadia, they nevertheless generated more than £500m of annual sales between them.

“These acquisitions would be very much consistent with Boohoo’s successful approach to date, and we would view the brands as a good fit within the group,” he said in a note to clients.

Sir Philip acquired Arcadia for £850m in 2002, a year when Asos’s revenues were just £4.1m and Boohoo did not yet exist.

He improved its profitability by cutting costs hard, and extracted large dividends in the early 2000s. But a lack of investment and the rapid rise of rivals both online and offline meant that by the mid-2010s, the brands were losing market share.

The coronavirus pandemic, which forced repeated closures of the entire store estate and deprived the group of cash flow to service its debts, prompted the decision last November to call in administrators.

Asos is in exclusive talks over the acquisition of the Topshop, Topman and Miss Selfridge brands, while plus-size retailer Evans has already been sold to City Chic Collective, an Australian group.

If the acquisition of Burton were to proceed, it would bring Debenhams and Burton back under common ownership nearly a quarter-century after their 1997 demerger — the transaction that broke up Ralph Halpern’s 1980s fashion empire and created Arcadia. At that time, the two groups employed more than 40,000 people between them.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.