Online retailer in rescue deal for two high street brands
Manchester-based online retailer Boohoo this morning confirmed it is in talks over a rescue deal for struggling high street retailers Karen Millen and Coast.
However, it is feared that it could result in the loss of hundreds of retail store jobs.
Sky News said Boohoo was last night in advanced talks to buy Karen Millen and sister brand Coast as part of a pre-pack administration deal.
There are still fears that the deal could fail to cross the finishing line.
But a rescue package could be announced today after the appointment of Deloitte as administrator to Karen Millen.
In response to speculation Boohoo this morning issued a statement, saying: “The board confirms that it has made an offer to acquire the online business of renowned British brands Karen Millen and Coast, together with all associated intellectual property rights.
“The group believes that the online business of these brands would represent highly complementary additions to its scalable multi-brand platform and extend the group’s offer as part of its vision to lead the fashion e-commerce market globally.
“These discussions may or may not result in agreement of a transaction. A further announcement will be made when appropriate.”
Over the past six weeks the retailer’s management had, unsuccessfully, tried to conclude a solvent sale.
Should Boohoo manage to acquire the two brands it would guarantee their survival.
However, Boohoo’s status as an online retailer would raise fears for hundreds of jobs in the Karen Millen and Coast high street stores.
Karen Millen and Coast employ a total of around 1,100 people in more than 30 stand alone stores and 175 concessions in the UK.
One retail analyst said on Monday that it was “inevitable” the stores would face closure with the loss of most of the company’s workforce.
The loss of these properties would deal yet another blow to landlords who, in recent months, have had to accept big rent cuts at stores operated by struggling high street retailers as part of company voluntary arrangement rescue deals, including House of Fraser and Debenhams.
Karen Millen was founded by the eponymous entrepreneur more than 30 years ago.
The Karen Millen and Coast businesses are being sold by Kaupthing, one of the Icelandic banks that collapsed during the 2008 financial crisis.
A prominent UK fashion brand, Karen Millen has a large international footprint with a presence in about 50 international markets, including Australia, France, Spain and the US.
The company acquired the Coast brand from administrators last year. It recorded sales of £162m in the year to February 2018, up from £158.8m the year before. However, it posted an operating loss of £1.4m last year, albeit an improvement on the previous year’s performance.
Boohoo, which was set up in 2006 by Mahmud Kamani and Carol Kane, now has a market value of £2.6bn, making it two-thirds the size of Marks & Spencer.