Following Boohoo’s £18m purchase of the online businesses belonging to Karen Millen and Coast, which took them out of administration, more than 200 UK outlets of the stores are set to close, putting nearly 1,100 jobs at risk.
According to Deloitte administrators, 62 head office staff have been made redundant with immediate effect and stores will only stay open for “a short time” while stock is sold off. The two chains currently trade from 177 concessions in department stores, including Debenhams and House of Fraser, and 32 standalone stores.
It’s a familiar story, the fashion chains have suffered from higher costs and falling shopper numbers on the high street amid changing shopping habits and weak consumer confidence. A number of fashion chains have collapsed this year including Select, LK Bennett and Pretty Green, with others resorting to seeking rent cuts to survive, including Debenhams, Monsoon and Philip Green’s Topshop group Arcadia.
Joint administrator at Deloitte, Rob Harding said: “As we continue to see, the retail trading environment in the UK remains extremely challenging.” He said Karen Millen had tried and failed to find a buyer for the whole business, but the deal with Boohoo would enable “the survival of these iconic British brands through an online platform."
John Lyttle, the group chief executive of Boohoo, said the acquisition was “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 ecommerce market."
Analysts said the acquisitions will help Boohoo, which focuses on young fashion, shift towards a more grown-up market as its shoppers get older and shy away from disposable fashion.
Boohoo is one of the few retailers to buck the trend of painful decline in the sector. In June, the company reported a 39% sales rise in the three months to 31 May. In 2006 it was founded by the fashion entrepreneur Mahmud Kamani and Carol Kane in Manchester, and it floated on the stock market in 2014. Boohoo’s shares climbed 4% after the Karen Millen deal was unveiled, valuing the business at £2.8 billion.
