boohoo Group plc (LON:BOO), a leading online fashion retailer, has announced that 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 Burton, Dorothy Perkins and Wallis brands from the joint administrators of Arcadia Group Limited and its relevant subsidiaries. boohoo will pay £25.2 million in cash, funded from existing cash resources, on completion.
Strategic Rationale
· Significant opportunity to grow boohoo’s market share across a broader demographic
o The Brands had over two million active customers in 2020
o Strengthens boohoo’s position as a leader in the global fashion e-commerce market with over 15 brands across the Group’s scalable multi-brand platform
· Strengthening boohoo’s menswear proposition
o Burton is an established brand which will enhance boohoo’s menswear portfolio in addition to boohooMAN and the recently acquired Maine and Mantaray brands
· Additional own label brands to support the Group’s new Debenhams marketplace
o Two routes to market across pureplay websites and the Group’s marketplace
John Lyttle, CEO, commented:
“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. 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, boohoo Group Executive Chairman, commented:
“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.”
Key Transaction Details
The Transaction is expected to complete on 9 February 2021, 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.
The Transaction will be financed through the Group’s existing cash resources, which stood at £386.9 million on 31 December 2020 prior to the acquisition of Debenhams for £55 million announced on 25 January 2021. The Group will only be acquiring the Brands and associated intellectual property rights, the Transaction does not include the HIIT brand and the Brands’ retail stores, concessions or franchises.
Financial Information
The Transaction 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 the Group expects to incur one-off transaction and restructuring costs in the region of £10 million to £15 million during this time.
The Group will provide a further update at its Full Year results in early May 2021 when it expects to have concluded the integration of the Brands onto its platform.
In the most recent financial year to 29 August 2020, the Brands generated unaudited revenues of approximately £427.8 million across all channels and an unaudited EBITDA loss of £14.3 million. The ongoing businesses for the Brands generated unaudited revenues of approximately £178.8 million over the same period.
