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Summary
- BooHoo Group to acquire all the intellectual property assets of Debenhams Retail Limited.
- The £55-million deal will lead to the closing of all the department stores of Debenhams.
UK’s leading online fashion retailer BooHoo Group PLC (LON:BOO) declared on 25 January that it had entered into an agreement to obtain all the intellectual property assets of Debenhams Retail Limited, which includes customer data and its associated business information from its joint administrators. The deal is worth £55 million plus VAT in cash and all its retail stores, stock or any financial services are not included in the deal.
It is anticipated that the agreement may not provide for the Group's revenues over the remaining five weeks of FY2021 and is also expected to incur modest start-up losses.
This transaction will prompt shutting down of all Debenhams stores, its brand and website in Britain permanently said the administrators. The £55-million deal has eventually resulted in 12,000 employees losing their jobs because of the department store vanishing from the high street.
(Image Source - © Kalkine Group 2020)
Geoff Rowley, Joint Administrator and Partner of FRP Advisory, expressed his anguish of failing to defend the job losses of many Debenhams employees ahead of the winding down period. However, he stated his expectation that the deal with Boohoo might provide some job opportunities.
Debenhams chain, which has been in presence since the last 243 years, had entered administration in April 2019 and was on the verge of closure after the administrators could not secure a rescue deal for the business, clarifying that they had not received a deliverable proposal.
During the very first lockdown, the company had announced that six of its shops, including its flagship department store on London’s Oxford Street, would not reopen ever.
About Debenhams
Debenhams is a leading, well-known fashion and beauty retailer in the UK. In the last financial update, Debenhams had reported of generating £1.524 billion of the unaudited Gross Transaction Value and £12.7 million of the unaudited EBITDA for the year ending on 31 August 2020.
BooHoo’s Intentions
The BooHoo Group feels the transaction would open the door of opportunity for it to develop in the target addressable market and increase the portion of wallet opportunity through a low-risk operating model and a new capital light structure.
In order to fulfil its ambition, BooHoo Group is of the intention to rebuild and relaunch the Debenhams platform. The first quarter of the FY2022 may see Debenhams’ relaunch on the Group's platform.
Stock Performance
Boohoo’s (LON:BOO) shares surged to close at GBX 348.50 on 25 January, up by 4.69 per cent after the Board announced the Debenhams’ acquisition.
