Debenham’s fallen kingdom in British High Street has allowed online fashion retailer Boohoo to snap it up at £55 million. The online fashion retailer has only bought Debenham’s brand and its website at this price. This means Boohoo is going to relaunch the department store as an online-only operation. They will not take responsibility to save any of Debenham’s 118 stores or the 12000 employees that come with it.
This paradigm shift highlights once again how the world has changed after the pandemic. The 243-year-old retail giant was, perhaps, the last soldier standing in British high Street, after the sad demise of BHS, Mothercare and many more.
Debenhams was in trouble for years with falling profits. Its struggles intensified by the coronavirus pandemic when shops were forced to close during the lockdown. Since the company went into liquidation in December 2020, administrators have been seeking offers for all or parts of the Debenhams business. Boohoo confirmed that it was purchasing the brand and its website, using its existing cash reserves, on Monday 25 January 2021. Experts consider that Boohoo is now in an even stronger market position by securing this deal than its competitors ASOS or Amazon.
So, who owns Boohoo and why has it bought Debenhams?
Boohoo is an online fast-fashion brand for women and men between 16 to 30. The Boohoo Group is owned by billionaire British businessman Mahmud Kamani. He co-founded the company alongside Carol Kane, the joint CEO of the brand.
Mahmud Kamani is an Indian-born billionaire who arrived in Manchester from Kenya in 1969 and sold handbags on a stall. He then invested his money in the wholesale business. He sourced garments from his native country for brands like Topshop and Primark.
The company that started with only three employees went onto become a global business with a 5000 strong workforce, in just 15 years. Mahmud Kamani is now one of the country’s most successful entrepreneurs with a net worth of just over £1billion.
The 15-year-old modern online retail upstart, Boohoo, has already snapped up prominent fashion brands like Oasis, Karen Millen and Coast out of administration. The online retailer has criticism for poor working conditions in its supply chain on several occasions. But it’s ability to promptly respond to the change of taste and style of today’s consumers have made its position strong in eCommerce today.
Kamani has earlier been surrounded by several other controversies, which include human trafficking. Boohoo’s Leicester based factory also came under the radar for forcing its employees to go to work while suffering from Coronavirus.
Why did Boohoo buy Debenhams?
Mahmud Kamani said, “The sale would allow Boohoo to become a leader in other retail categories and fashion, including beauty and homeware.”
Speaking about the deal, he 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.”
Debenhams was a long-standing and leading UK fashion and beauty retailer with high brand awareness. Along with 118 departmental stores across the UK, it had an established online platform with approximately 300 million UK website visits per annum, making it one of the country’s top retail chains.