Debenhams – Another Nail in The High Street Coffin -Thanks to Boohoo

Boohoo, the online fashion retailer, has bought the Debenhams brand and website for £55m, but will not take on any of the businesses remaining 118 High Street stores or its workforce.
Boohoo, the online fashion retailer, has bought the Debenhams brand and website for £55m

Boohoo, the online fashion retailer, has bought the Debenhams brand and website for £55m, but will not take on any of the businesses remaining 118 High Street stores or its workforce.

 
Marc Ford

Marc Ford

Editor-in-Chief, Business Media Owner, Business Coach, Author and Keynote Speaker. Works with over 100's of small businesses every year. Trusted by BBC TV and Radio, Channel 4, Mercedes Benz, Hitachi Capital on business matters.

Although Boohoo have said said it was a “transformational deal” and a “huge step”, the reality means that around 12,000 jobs at the department store chain are set to go and a 242-year-old Debenhams placed on an ever growing list of ‘big high-street failures’ since 2000.

The Best Outcome? 

The administrators of Debenhams UK, FRP Advisory, said they had undertaken a “thorough and robust process” to achieve “the best outcome for Debenhams’ stakeholders. This transaction will allow a new Debenhams-branded business to emerge under strong new ownership, including an online operation and the opportunity to secure an international franchise network that will operate under licence using the Debenhams name.” This statement alone will make Mike Ashley ‘bristle’ when his £125m offer and regular public fighting with the Debenhams board when the realities of the retailers struggles emerged, was effectively told to wait in the naughty boys corner because they wanted anyone, but him.

Looking forwards, Boohoo has already bought a number of High Street brands out of administration. It snapped up Oasis, Coast and Karen Millen, but not the associated stores. Its executive chairman, Mahmud Kamani, said: “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.” Boohoo said Debenhams was expected to relaunch on Boohoo’s web platform in early 2022.

Another Hole in The High Street

While online retailers have been chipping away at their High Street rivals for years, few, (although I did), could have predicted how quickly bricks-and-mortar stalwarts have collapsed. The pandemic has fatally undermined their already soft and squishy finances. Businesses that appeared to have a chance of survival just a year ago have been wiped out and their brands bought by online players.

The scale of the change is profound: when Debenhams listed on the stock exchange in 2011, investors valued it at £1.6bn. Boohoo, which was founded only in 2006, already has a stock market value of £4.4bn. Asos, a bit player two decades ago when Sir Philip Green’s Arcadia group was riding high and toying with a bid for Marks & Spencer, is now by valued by the stock market at £5bn. Neither BooHoo or Asos saw any actual value in the Debenhams or Topshop High Street estates and that creates another problem, (or opportunities depending on how you look at it), Ieaving councils and landlords around the country wondering how they will fill town centres and their premises that were seen as ‘bankers’ because they were based on retail.

Anyone ‘Brave’ Enough?

But there are entrepreneurs and private equity companies gearing up to buy struggling pub chains, in the hope of a recovery once lockdown restrictions are eased, so will some investors be wondering what next for the High Street? The British love affair with shopping will not end overnight and a well-placed punt now could have big rewards…but it needs to be different, it needs to offer something that online can’t and something that UK shoppers really need….even if they don’t realise it yet.

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Business Coach, Author and Consultant. Has worked with BBC TV and Radio and Channel 4 on business matters. Trusted by Mercedes Benz, Hitachi Capital. Keynote speaker.