The GBP25.2m acquisition of Dorothy Perkins, Burton and Wallis completes the transition of Philip Green’s former high street empire solely to the online channel

The GBP25.2m acquisition of Dorothy Perkins, Burton and Wallis completes the transition of Philip Green’s former high street empire solely to the online channel

As acquisitive Boohoo Group has moved to snap up the Dorothy Perkins, Burton, and Wallis brands from retail giant Arcadia Group in a GBP25.2m (US$34.5m) deal, one industry analyst notes the online fast fashion retailer must give these "tired" Arcadia brands attention for them to thrive. 

Emily Salter, apparel analyst at GlobalData:
"The GBP25.2m acquisition of Dorothy Perkins, Burton and Wallis completes the transition of Philip Green's former high street empire solely to the online channel in a move that has been facilitated by Covid-19 and will significantly change the face of UK physical retail. Along with the Boohoo Group's acquisition of Debenhams, this will diversity its range of brands, with these Arcadia brands a natural fit for Debenhams as an online marketplace. However, with so much already on the Boohoo Group's plate, it must ensure they receive the revamp they desperately need instead of letting them fall by the wayside.

"Burton will give the Boohoo Group the opportunity to grow share in the menswear market, with its wider customer base providing it with a stronger path to potential growth than boohooMAN. However, Burton's heavy focus on formalwear has been rendered redundant throughout the pandemic, with demand unlikely to fully return as working from home continues, so its product focus will need to be refreshed. Wallis' core customer is females over 45, a demographic which the Boohoo Group has little experience of targeting and will be less receptive towards the group's usual strategy of heavy discounting and social media-led marketing. Dorothy Perkins will be a better fit with the group's current stable of brands, with a similar shopper base to Oasis and Warehouse, however, the group will need to establish a unique selling point for Dorothy Perkins to create differentiation between the brands."

Simon Underwood, business recovery partner at accountancy firm, Menzies LLP:
"In its second brand-only deal in the space of a few weeks, Boohoo has upped the ante and is going all out for the title of the UK's largest fashion marketplace. The online retailer has a track record for this type of deal, having secured Karen Millen, Coast, Warehouse, and Oasis last year. The deal is also a further reminder of how little appetite there is in the current marketplace for retailers with extensive store portfolios.

"In recent months, online platforms such as Boohoo and Asos have been on the acquisition trail, looking to buy established fashion names to extend their online presence. By bolting on well-known fashion brands such as Dorothy Perkins, Wallis, and Burton to their established distribution networks, fast fashion retailers may also be able to influence consumer habits, creating an evolution towards higher quality items.

"Arcadia's failure to adapt in order to take advantage of the bricks to clicks trend was a key reason for its downfall and hammers home the urgent need for retailers to review their business models and reduce costs. For commercial landlords, finding innovative ways to transform unused stores into income-generating assets will also be one of the biggest challenges of 2021."

Greg Lawless, analyst at Shore Capital:
"In our view, this is a further bolt-on acquisition hot on the heels of the online Debenhams deal for GBP55m late last month. We understand that Dorothy Perkins may have some brand equity but struggle with the rationale of Wallis, although the administrators of the Arcadia stable needed to find a new home for all the brands.

"Boohoo continues to scale up, but we question the bandwidth of the existing management team and potential execution risk continues to rise with every acquisition. There is no doubt that Boohoo will trade these brands more commercially benefiting from the increased volume through its multi-brand platform, alongside its superior sourcing and marketing skills. That said, the complexity of the group continues to rise alongside the longstanding corporate governance and the cost of sourcing rising as the company pivots away from Leicester. On balance, whilst the business continues to scale, we need to see tangible evidence of cultural change in the organisation."

Elliott Jacobs, EMEA commerce consulting director:
"Boohoo acquisition of the Arcadia brands signals a new direction for British retail.

"With brick-and-mortar retail in steady decline and high street only brands unable to adapt, digitally savvy brands have been able to pick up heritage brands at hugely reduced prices.

"Boohoo, with its highly efficient multi-brand platform, is able to bring the well-known Dorothy Perkins, Burton, and Wallis online and reap the benefits. Its digital architecture is simply a perfect fit for legacy brands needing to completely shift their business models immediately.

"Crucially, Boohoo can also make decisions those brands simply could not. Putting potentially 12,000 jobs at risk is not something the Arcadia Group could have survived – selling means hard decisions can be taken and brands may survive in some form.

"The pandemic has changed the face of retail forever – we'll likely see more struggling household names join the list of companies snapped up, as online only retailers attempt to consolidate their market positions."

Sean Moran, restructuring and insolvency partner at law firm Shakespeare Martineau: 
"Boohoo has succeeded in picking up the remnants of Sir Philip Green's high street empire. With several major acquisitions in a matter of weeks, the e-tailer has certainly bounced back from recent adverse publicity over its supply chain, to boost its portfolio of brands.

"While times on the high street remain tough, recent deals from Boohoo and Asos prove that opportunities are there for businesses with a strong online presence. A consequence of this is that tenants of remaining retail operators may find themselves in a stronger bargaining position to be able to kickstart negotiations with landlords. 

"Boohoo clearly sees value in the Dorothy Perkins, Wallis, and Burton brands and will be keen to ensure customers get on board with an alternate online approach to the purchasing experience. In light of the pandemic, online retail is leading the way and the younger audience is at the forefront of that change.

"Only time will tell if this is a permanent shift. Perhaps this was the direction consumer attitudes were heading? There is no denying that the pandemic was, and continues to be, a catalyst for drastically altering shopper habits.

"There have been plenty of calls to restructure the high street, with many advocating a switch from commercial to residential occupancy of some larger stores for several years. Covid-19 and the latest swathe of retail casualties has brought that back into focus and it's a trend that is likely to grow as the effect of the extended lockdown continues to bite.

"It remains to be seen what appetite consumers will have to return to the high street post lockdown; there is certainly an argument the people will return as soon as it's allowed. However, it's likely that the high street as we know it may look slightly different when normal life resumes."