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Boohoo takes on Karen Millen and Coast in 'acquisition of contrasts'

Online fashion group Boohoo Group acquired occasionwear retail brands Karen Millen and Coast out of administration, yesterday (6 August), in what analysts are describing as an “unlikely” takeover.

The deal, which covers the intellectual property and online operations of the two companies recently put up for sale by Icelandic bank Kaupthing, follows previous Boohoo acquisition activity focused on fast fashion womenswear businesses PrettyLittleThing, Nasty Gal, and Miss Pap.

Deloitte restructuring partners Rob Harding and Richard Hawes were appointed as joint administrators of Karen Millen and Coast, yesterday, to facilitate a sale – and very soon after their appointment the takeover was confirmed for £18.2 million.

Commenting on the seemingly pre-pack administration deal, Emily Salter, retail analyst at market intelligence group GlobalData, said: “The Boohoo Group seems an unlikely suitor for premium womenswear brands Karen Millen and Coast.”

She added it “contrasts to Boohoo’s focus on selling a high volume of product quickly, offering frequent promotions, and using social media as an important marketing method”.

Salter commented: “The acquisition risks devaluing Coast and Karen Millen as their success stems from high quality product and sophisticated designs, significantly different to the Boohoo Group.”

The analyst also cautioned that the rapid revenue growth it has achieved with previously acquired brands might be difficult to replicate this time, although she talked up Boohoo’s marketing, social media usage, and ability “to generate awareness and a buzz around its brands”.

However, in its most recent financial year to February 2019, unaudited management information shows direct online sales from the two acquired websites totalled £28.4 million – and Boohoo said this will help the group in its mission for online fashion world domination.

John Lyttle, Boohoo Group CEO, said yesterday’s move “represents 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”.

The closure of Karen Millen and Coast concessions will provide another blow to department store chains Debenhams and House of Fraser, which have struggled to drive sales growth and have seen a raft of concession partners depart in recent months.

Some 62 jobs have gone at Karen Millen and Coast as a direct result of yesterday’s move, while the future for the wider 1,100-strong workforce remains uncertain.