(Bloomberg) -- Boohoo Group Plc, the online fashion retailer, agreed to buy the Debenhams brand for 55 million pounds ($75 million) but will not keep the ailing U.K. department stores open meaning thousands of jobs will be lost.
Boohoo said Monday it will acquire the Debenhams brands and its fashion sub-brands, including Manta Ray and Principles. The modest purchase price reflects the fact that Boohoo is not buying any of the retailer’s stock or keeping its 124 stores which, when the current U.K. lockdown ends, will only reopen long enough to sell remaining merchandise before closing again.
Boohoo’s last-minute swoop reflects the fast-growing online retailer’s desire to expand its offerings online beyond its current core customer base of teenage and young twenty-something women. Debenhams also has a substantial beauty business online. Boohoo said in a statement it wants to create the “U.K.’s largest marketplace across fashion, beauty, sport and homeware.”
The deal also comes after Mike Ashley’s Frasers Group Plc failed to carry out a deal to buy the Debenhams brand, its website and some of the chain’s 124 stores. Earlier talks with JD Sports Fashion Plc to buy Debenhams for 300 million pounds also collapsed after the failure of Arcadia Group, whose brands Topshop and Dorothy Perkins have a dominant presence in Debenham’s stores.
Debenhams is one of Britain’s best-known retail brands, which traces its history back more than 240 years but has struggled recently, weighed down by hefty rents and large property taxes of its stores. The retailer also faces the challenge of fierce competition from e-commerce in the U.K. as consumers increasingly shifting from shopping in stores to buying online. The trend has accelerated during the pandemic.
Debenhams entered administration, a U.K. form of insolvency, in December and is currently in the process of being liquidated with its stock sold off.
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