Boohoo will acquire the brands, intellectual property, and inventory of the three brands for a cash consideration of GBP25.2m and will also take on certain liabilities for forward committed stock orders

Boohoo will acquire the brands, intellectual property, and inventory of the three brands for a cash consideration of GBP25.2m and will also take on certain liabilities for forward committed stock orders

UK online fast fashion retailer Boohoo Group has acquired the Dorothy Perkins, Burton, and Wallis brands from retail giant Arcadia Group in a GBP25.2m (US$34.5m) deal that completes the transition of Philip Green's former high street empire solely to the online channel.

In a statement this morning (8 February), Boohoo said it has agreed to acquire all of the e-commerce and digital assets and associated intellectual property rights, including customer data, related business information, and inventory of the brands from joint administrators Deloitte. It will also take on certain liabilities for forward committed stock orders.

The transaction does not include the HIIT label and the brands' retail stores, concessions, or franchises. As of today, the Dorothy Perkins, Burton, and Wallis store network comprised 214 sites, all of which will permanently close.

At completion, about 260 employees across all three brands, including design, buying, merchandising and digital, will transfer to Boohoo. In addition, Arcadia will provide transitional services including distribution and certain head office functions as part of the integration of the brands over the coming months.

Boohoo said the move presents a significant opportunity to grow its market share across a broader demographic and strengthens its position as a leader in the global fashion e-commerce market. Boohoo, which is working toward achieving its vision to lead the fashion e-commerce market globally, now has more than 15 brands across its multi-brand platform.

Specifically, it said the addition of Burton will strengthen its menswear proposition in addition to boohooMAN and the recently acquired Maine and Mantaray brands via its acquisition of the Debenhams brands and its websites last month.

"We are delighted to announce the acquisition of the assets associated with the online businesses of the three established brands Burton, Dorothy Perkins and Wallis," said Boohoo CEO John Lyttle. "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. We have a successful track record of integrating British heritage fashion brands onto our proven multi-brand platform, and we are looking forward to bringing these brands on board."

Mahmud Kamani, executive chairman, added: "This is a great acquisition for the group as we extend our market share across a broader demographic, capitalising on growth opportunities as more and more customers shop online. We continue to grow our portfolio of brands and customer base, strengthening our position as a leader in global fashion e-commerce."

The transaction is expected to complete tomorrow (9 February), after which the relevant operations for the Dorothy Perkins, Wallis, and Burton brands will continue as the group integrates them onto its platform in the first quarter of its financial year ending 28 February 2022.

Boohoo will finance the move through its existing cash resources, which stood at GBP386.9m on 31 December 2020 prior to the acquisition of Debenhams for GBP55m.  

The deal is expected to contribute modest revenues over the final few weeks of the group's current financial year, with continuity of service being provided to customers through a Transitional Services Agreement (TSA). The integration and TSA are expected to last for a period of up to three months, and Boohoo expects to incur one-off transaction and restructuring costs in the region of GBP10-15m during this time. 

In the most recent financial year to 29 August 2020, the brands generated unaudited revenues of about GBP427.8m across all channels and an unaudited EBITDA loss of GBP14.3m. The ongoing businesses for the brands generated unaudited revenues of about GBP178.8m over the same period.

The acquisition completes the sale of the Arcadia Group brands after the company collapsed into administration in November last year, putting 13,000 jobs at risk.

Arcadia's Topshop, Topman, Miss Selfridge and HIIT brands were acquired by UK online fast-fashion retailer Asos last week in a GBP330m (US$452.2m) deal that includes existing inventory and forward orders. The Evans brand was sold to Australia's City Chic Collective in December for GBP23m.

Deloitte said in total, these sales together with other asset realisations, have raised proceeds to date of over GBP500m for the benefit of creditors. The process to generate proceeds from the group's remaining assets, principally from its property portfolio, is ongoing.

Emily Salter, apparel analyst at data and analytics company GlobalData notes Boohoo's latest acquisition completes the transition of Sir 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. 

Click on the following link for more analyst reaction to the news: Boohoo must revamp Arcadia brands for them to thrive – What the analysts say.