New York –British online fashion retailer Boohoo plc. announced earlier this week it had made an offer to buy “the online business of renowned British brands Karen Millen and Coast, together with all associated intellectual property rights.”
Boohoo has bought the online business and all associated intellectual property rights of both businesses, taking them out of administration. The former said it paid 18.2 million pounds in cash for the brands, in line with the details of a bid announced earlier.
Boohoo’s management believes “the online business of these brands would represent highly complementary additions to its scalable multi-brand platform.” It’s worth recalling that both brands’ combined online business of both brands generated 28.4 million pounds in sales, which generated 28.4 million pounds in sales in the year to February 2019.
“Karen Millen, in particular, would also bring a slightly older and higher price point shopper into the group fold to extend (Boohoo’s) overall offer,” Liberum analyst Adam Tomlinson said, adding that Boohoo could also make use of its distribution channel.
What does’ Boohoo’s move mean for fashion retailers?
Nevertheless, the fact that the e-tailer just acquired the online business from both brands arose many concerns about hundreds of jobs on the one hand and about the future of brick and mortar on the other.
“We can expect more deals of this nature as it (e-commerce) increasingly becomes the key battleground for retail and consumer businesses seeking to build market share and dominate their particular sectors,” said in this regard Jonathan Buxton, head of retail and consumer at Cavendish Corporate Finance.
Of a similar opinion are analysts at the ‘Motley Fool’, who highlighted Boohoo’s “history of acquiring fashion brands and then throwing its marketing weight behind them to turbocharge sales.” They also trust on Boohoo’s growth to be just about to get stronger, while Karen Miller and Coast brands will flourish under its ownership: “These established British brands will also be able to make use of the group’s delivery infrastructure, lowering distribution costs and increasing service quality.”
On a related note, investors have also rewarded Boohoo’s move, with its stock (LSE: BOO) share price reaching one of the best performances on the London Stock Exchange in the year to date. In fact, shares at Boohoo are up nearly 50 percent this year, highly ahead last year’s 20 percent loss of value.
Boohoo has reported revenue growth of 48 percent to 856.9 million pounds for its 2019 financial year, beating City’s estimates by 2 percent.
Picture: Facebook/Karen Millen