The tale of Topshop owner Arcadia Group’s downfall is one of a high street in decline.
On Monday, digital “cheap and chic” seller Boohoo Group plc plucked the bankrupt empire’s three remaining brands out of Sir Philip Green’s grasp, trading 25.2 million pounds ($35.5 million) for Dorothy Perkins, Burton and Wallis’ good bits (brand, inventory and intellectual property) while leaving their 214-store footprint behind.
The deal, expected to close Tuesday, means the one-time fashion empire’s collapse into administration will destroy roughly 12,600 jobs in the U.K., after fellow fashion e-tailer Asos nabbed Topshop, Topman, Miss Selfridge and HIIT while City Chic Collective took on complementary plus-size label Evans. Arcadia has already shuttered 31 stores and Boohoo, rocked by sweatshop allegations last year, acquired Debenhams while casting its stores by the wayside.
In total, the Arcadia and Debenhams bankruptcies have their fingerprints on about 25,000 jobs losses, and signal the rising power players in a rapidly evolving fashion sector.
Just 260 employees, largely in design, buying, merchandising and digital operations, will join Boohoo as a result of the latest Arcadia deal, said Deloitte administrators overseeing the bankruptcy.
“In addition, Arcadia will provide transitional services including distribution and certain head office functions as part of the integration of the brands within boohoo over the coming months,” they added.
While the Boohoo deal brings the total bankruptcy haul to “over 500 million pounds ($684.3 million) for the benefit of creditors,” administrators noted, the process to drum up interest in Arcadia’s property assets is “ongoing.”
Boohoo, meanwhile, funded the triple-brand deal with existing cash holdings, noting the “significant opportunity to grow [its] market share across a broader demographic.” In particular, Burton represents an established brand that could enhance Boohoo’s burgeoning menswear portfolio, in addition to boohooMAN and the recently acquired Maine and Mantaray brands.
“Acquiring these well-known brands in British fashion out of administration ensures their heritage is sustained, while our investment aims to transform them into brands that are fit for the current market environment,” said Boohoo Group CEO John Lyttle. “We have a successful track record of integrating British heritage fashion brands onto our proven multibrand platform, and we are looking forward to bringing these brands on board.”
Boohoo executive chairman Mahmud Kamani added, “We continue to grow our portfolio of brands and customer base, strengthening our position as a leader in global fashion e-commerce.”