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Asos and Boohoo Could Kill 25,000 Jobs, 500 Stores This Year

British high streets are in for a world of pain as the latest retail deals are primed to take well-known fashion names exclusively online, casting hundreds of stores by the wayside and leaving tens of thousands of jobs in the lurch.

Fast-fashion e-tailer Boohoo is taking on Debenhams’ assets, but not its stores while fellow millennial-centric digital pure-play Asos is looking to bring Topshop parent Arcadia into the fold. These recent developments, which threaten 25,000 jobs and roughly 500 stores, underscore the rapidly shifting power dynamics afoot in retail, which is suffering amid extended lockdowns to curtail the mutating coronavirus and its speedy spread.


Boohoo Group, whose family of brands includes Nasty Gal and Pretty Little Thing, has acquired the bankrupt Debenhams brand, along with related intellectual property assets, for 55 million pounds ($75.1 million), it said Monday, leaving the department store’s 10,000-strong workforce facing likely job losses.

When the 242-year old chain collapsed into administration nearly a year ago, it operated over 100 store locations. Some doors have since closed, taking those store jobs out of the picture.

Boohoo made no secret of its ambitions to grow its trend-chasing business on the back of the “capital light and low risk operating model” afforded by the Debenhams deal. The acquisition, it added, is “complementary to the Group’s highly successful direct-to-consumer multi-brand platform” while augmenting Boohoo’s “target addressable market” and increasing “share of wallet opportunity.”

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Known primarily for offering the moment’s hottest fashions at rock-bottom prices, Boohoo said the Debenhams deal will spur its growth into new categories, from beauty and sport to homewares.

“The Group plans to expand the range of products sold via the Debenhams marketplace by maintaining existing marketplace brand relationships and adding new brands over time,” it said. “The relaunched marketplace will also provide an exciting new route to market for the Group’s existing brand portfolio.”

Boohoo plans to absorb Debenhams’ brands into its current brand portfolio and sell them through both the core Debenhams site, which handles 300 million visits annually, and pureplay websites for the Maine, Mantaray, Principles and Faith brands.

Mahmud Kamani, executive chairman, described the acquisition as “transformational” for Boohoo and its ambitions to “create the UK’s largest marketplace.”

In an investor presentation, Boohoo documented the U.K. apparel market 15 percent decline last year, while the market for online fashion surged 26 percent. “Up to 55 percent of fashion products are now bought online, up from 33 percent previously,” it said.

The e-tailer expects to relaunch Debenhams in the first quarter of fiscal year 2022. Under a licensing deal, Boohoo will run the current Debenhams site prior to the relaunch to allow brick and mortar to organize their phase-out once stay-at-home order allow their reopening.

The cash transaction will be financed through Boohoo’s existing cash balance, which totaled 386.9 million pounds ($528.4 million) as of Dec. 31.

For Debenham’s the fiscal year ended Aug. 31, unaudited online net revenues were about 400 million pounds ($546.3 million). The marketplace, mostly fashion and homewares, represented about 25 percent of online revenue.


Meanwhile, Asos on Monday said it was in “exclusive discussions” with bankrupt Arcadia‘s administrators to acquire Topshop, Topman, Miss Selfridge and HIIT brands.

The fashion marketplace would use cash reserves to fund a deal, which it said is far from a foregone conclusion but represents a “compelling opportunity to acquire strong brands.”

An Asos-Arcadia sale could drive massive job losses should the online merchant be successful in its pursuit. At the time of its November administration, the fashion empire helmed by Sir Philip Green operated about 444 stores, employed roughly 13,000 and has since announced plans to close 31 stores and terminate 700 jobs.

Asos wasn’t originally considered a leading contender for Arcadia since most other competitors were linked to consortiums or joint ventures that were expected to make higher offers.

It wasn’t immediately clear what the future holds for Arcadia’s other brands, Burton and Dorothy Perkins. Mike Ashley’s Frasers Group was said to be interested, but it isn’t known if that is still the case.

Lockdown and foot traffic

What was to have been six-week pandemic lockdown in Northern Ireland beginning on Dec. 26 has now been extended until March 5.

The country’s tightest restrictions shut nonessential retailers and barred residents from leaving home save for medical appointments or grocery trips.

Neighboring Republic of Ireland, which was planning to lift restrictions at the end of January, will remain in lockdown through next month. Irish Prime Minister Micheál Martin said Sunday that restrictions could remain in place for the first six months of 2021, although that could change depending on coronavirus vaccination efforts.

The U.K. is currently in its third national lockdown through March 31, while Scotland’s lockdown is expected to remain in place through at least mid-February and Wales is likely to continue beyond the end of January.

U.K. Prime Minister Boris Johnson earlier this month described the new Covid-19 variant as “frustrating and alarming.” Initially, the new U.K. strain was thought to be more contagious, but not necessarily more deadly. Johnson said at a Downing Street briefing last week that the new strain is beginning to show signs that it “may be associated with a higher degree of mortality.”

Vaccines from Pfizer and Oxford-AstraZeneca, the two in distribution in the U.K., are still  believed to be effective against the new variant. Moderna, which is in distribution along with Pfizer in the U.S., said on Monday that while its vaccine protects against the U.K. strain and the variant from South Africa, it plans to test a booster to its two-dose process as an “abundance of caution.”

Meanwhile, retail data analytics firm Springboard said on Monday that foot traffic across all U.K. retail destinations rose by 9 percent last week, versus declines in prior weeks. Saturday was the peak shopping day of the week, up 16 percent from the week before.

“Despite rain and snow last week across much of the UK, footfall rose in retail destinations last week from the week before for the first time in five weeks; perhaps providing the first indications of lockdown fatigue emerging once again,” said Diane Wehrle, Springboard’s insights director. “The last rise in footfall was in the peak Christmas trading week beginning [Dec. 13], and even then the rise was only a third as large as last week’s; since then there has been a double digit drop in footfall in each week.”