Boohoo and ASOS feast on remnants of UK high street brands

By James Davey

LONDON (Reuters) – Britain’s biggest online fashion retailers Boohoo and ASOS have swooped on collapsed Debenhams and Arcadia as the COVID-19 pandemic turbocharges the industry’s shift to digital, threatening tens of thousands of jobs.

While the internet has been reshaping the British retail landscape and the clothing sector for more than a decade, multiple lockdowns to stem the spread of the coronavirus have accelerated the move to home shopping.

Established in 2000 and 2006 respectively ASOS and Boohoo are Britain’s biggest e-commerce success stories, ideally placed to tap into a generation of consumers who increasingly shop on mobile phones and communicate via social media.

ASOS quadrupled profit in its 2019-20 financial year and Boohoo posted a 51% jump in first-half profit despite negative publicity over its supply chain. Their stock market capitalisations have grown to 4.8 billion pounds ($6.6 billion) and 4.2 billion pounds respectively.

By contrast, Debenhams and Philip Green’s Arcadia – the stores of which have been a fixture on Britain’s shopping streets for decades – both collapsed into administration last year, putting 25,000 jobs at risk.

Boohoo on Monday said it had acquired the 243-year-old Debenhams brand and other business assets, including all its in-house brands and websites, for 55 million pounds.

But the deal with Debenhams’ administrators, FRP Advisory, does not include any of the chain’s 124 stores or safeguard jobs.

Debenhams has been in administration since April and last month FRP said it was starting a liquidation process, putting 12,000 jobs at risk.

Debenhams’ stores are closed because of lockdowns, but once able to reopen FRP will conduct a stock liquidation before closing the sites permanently, the administrators said.

“The acquisition of the Debenhams brand is an important development for the group as we seek to capture incremental growth opportunities arising from the accelerating shift to online retail,” said Boohoo Chief Executive John Lyttle, adding that the deal will enable it to grow into new categories including beauty, sport and homewares.

Shares in Boohoo were up 4.4% at 1037 GMT.

‘COMPELLING OPPORTUNITY’

ASOS, meanwhile, announced that it was in exclusive talks with the administrators of Green’s fallen Arcadia group over the acquisition of the Topshop, Topman, Miss Selfridge and HIIT brands.

Arcadia collapsed into administration in November, putting more than 13,000 jobs at risk.

“The board believes this would represent a compelling opportunity to acquire strong brands that resonate well with its (the company’s) customer base,” ASOS said, adding that any deal would be funded from cash reserves.

Sky News on Saturday reported that ASOS could pay more than 250 million pounds for the Topshop brand.

Next pulled out of the contest on Thursday, saying it did not want to overpay.

Shares in ASOS were up 5.2%, extending year-on-year gains to 58%.

Given the likelihood of huge job losses, shopworkers union Usdaw called for urgent action from the UK government to “save our high streets”, noting that there were 20,000 store closures and 180,000 retail job losses last year.

(Reporting by James Davey; Additional reporting by Paul Sandle; Editing by Kate Holton and David Goodman)