Fashion retailer Boohoo has acquired the Debenhams brand and its website for £55 million but will not take its stores or its workforce.
Boohoo explained that purchasing the Debenhams brand and website was a "transformational deal" and a "huge step" but it will not absorb any of the firm's remaining 118 High Street stores or employees, leaving up to 12,000 people jobless.
Debenhams brand acquisition
Prior to Bohoo's purchase, the 242-year-old Debenhams department store chain is already closing down its shops after administrators failed to secure a rescue deal. Sir Philip Green's Arcadia Group, the current owner of the brand, fell into administration last November.
Online retailer Boohoo said it only wanted the brands, not their shops.
Debenhams began a closing-down sale at its 124 stores in December, as the administrators continued to look for offers for all or parts of the business. FRP Advisory, the administrators of Debenhams UK, claims that they had undertaken a "thorough and robust process" to achieve "the best outcome for Debenhams' stakeholders".
FRP Advisory said: "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 license using the Debenhams name."
For years, Debenhams have struggled due to declining profits and increasing debts as more people do shopping online. In two years, it has called in administrators twice, with the most recent last April.
The situation became more dire for the company due to the onset of the coronavirus pandemic that forced non-essential retailers to close down stores for prolonged periods. Since May, Debenhams tried to stay afloat by shutting down some of its shops and reducing its workforce by approximately 6,500 jobs.
Prior to the Debenhams acquisition, Boohoo has already purchased several High Street brands out of administration, including Oasis, Coast and Karen Millen, but not their associated stores.
Boohoo executive chairman Mahmud Kamani explained: "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 added.
According to Boohoo, the Debenhams brand is scheduled to relaunch on its web platform later this year but in the mean time, it will continue to operate its website for an agreed period.
Issues at Boohoo
The online retailer recently faced criticism over workers' pay and conditions, its ultra-low pricing, as well as issues about the environmental impact of its fast-fashion business model.
According to critics, some of Boohoo's suppliers in Leicester were allegedly abusing employment law. Investigations in 2020 revealed that workers were receiving pay below the minimum wage.
An independent review of the claims was conducted and it discovered a series of shortcomings from the company. In response to this, Kamani said last month that the firm was working to fix the problems, adding:Â "We will make a better Boohoo."
