Online fashion retailer boohoo has acquired the brands, intellectual property and online businesses of high street chains Karen Millen and Coast, in an £18.2 million deal. Both companies were put into administration to facilitate the sale.
Although the online businesses have been saved, no physical stores were acquired in the pre-pack administration, which allows the buyer to ‘cherry pick’ certain parts of a business. The fate of the remaining 32 high street stores and 177 concessions across the UK is therefore uncertain.
Karen Millen acquired Coast in December 2018 when it bought the brand’s UK concessions portfolio and online business. Both companies were then put up for sale by their ex-parent company Icelandic bank Kaupthing in June 2019, following financial struggles.
This latest acquisition reflects the ever more challenging retail climate for high street stores due to the increasing growth of the online fashion market. This is an interesting expansion for boohoo, a business centred around the affordable ‘fast fashion’ industry rather than the high-end occasion wear sold by Karen Millen and Coast. The online retailer is perhaps looking to diversify its customer base, which at present is largely aimed at females aged 16-25, to further boost sales and appeal to a wider demographic.
So where now for high street retailers? Perhaps a high street presence and a heavy footfall is no longer enough if not complimented by a strong online presence. Online retailers, on the other hand, avoid the restraints of pricey city centre rents and steep business rates, and benefit from a more streamlined business model. Not only does the boohoo deal demonstrate yet another example of the shift from high street to online retail, but also the value that intellectual property and a strong, reputable brand can have to a business.
Commenting on the deal, chief executive of boohoo John Lyttle said: “The acquisition of the online business of two great and renowned British brands in Karen Millen and Coast represents another milestone in the group’s growth story as it continues to invest in its scalable multi-brand platform and gain further share in the global fashion e-commerce market.”
Boohoo has officially acquired the brands, intellectual property and online business of Karen Millen and Coast in a pre-pack administration deal worth £18.2 million.