TIDMBOO
RNS Number : 6824M
boohoo group plc
25 January 2021
FOR IMMEDIATE RELEASE 25 January 2021
The information contained within this announcement is deemed by
the company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
boohoo group plc
("boohoo" or "the Group")
STRATEGIC ACQUISITION TO DEVELOP ONLINE MARKETPLACE
"Development of online marketplace and extension of target
addressable market"
boohoo, a leading online fashion retailer, announces that it has
acquired all of the intellectual property assets (including
customer data and related business information and selected
contracts) of Debenhams Retail Limited (in administration)
("Debenhams") from its joint administrators, for GBP55 million
(plus VAT) in cash (the "Transaction").
Debenhams is a long-standing and leading UK fashion and beauty
retailer with high brand awareness, and an established online
platform with approximately 300 million UK website visits per
annum. This makes it a top 10 retail website in the UK by
traffic.
The Transaction represents a fantastic opportunity to grow the
Group's target addressable market and increase the share of wallet
opportunity through a new capital light and low risk operating
model that is complementary to the Group's highly successful
direct-to-consumer multi-brand platform.
The Group intends to rebuild and relaunch the Debenhams
platform, helping further the Group's stated ambition to lead the
fashion eCommerce market, and grow into new categories including
beauty, sport and homeware through:
-- Marketplace: Creating the UK's largest marketplace across
fashion, beauty, sport and homeware. The Group plans to expand the
range of products sold via the Debenhams marketplace by maintaining
existing marketplace brand relationships and adding new brands over
time. The relaunched marketplace will also provide an exciting new
route to market for the Group's existing brand portfolio
-- Beauty: The Group will continue to operate the current
wholesale model, but will also look to add new beauty brands via
the marketplace model
-- Own brand fashion: Debenhams' own fashion brands will be
absorbed into boohoo's current brand portfolio and sold via the
core Debenhams site and their own pureplay websites
John Lyttle, CEO, commented:
"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.
We have developed a successful multi-brand direct-to-consumer
platform that continues to disrupt the markets that we operate in.
The acquisition represents an exciting strategic opportunity to
transform our target addressable market through the creation of an
online marketplace that leverages Debenhams' high brand awareness
and traffic through the development of beauty and fashion
partnerships connecting brands with consumers."
Mahmud Kamani, Executive Chairman, commented:
"This is a transformational deal for the Group, which allows us
to capture the fantastic opportunity as eCommerce continues to
grow. Our ambition is to create the UK's largest marketplace. Our
acquisition of the Debenhams brand is strategically significant as
it represents a huge step which accelerates our ambition to be a
leader, not just in fashion eCommerce, but in new categories
including beauty, sport and homeware."
Strategic Rationale
1. Unlocking Debenhams' online opportunity
-- Transforming Debenhams through the development of an exciting
online marketplace, capitalising on the sector's structural shift
to online
-- Utilising Debenhams' existing pureplay brands and extensive
third party brand relationships as the foundations for the
marketplace
-- Further developing new third party fashion and beauty
partnerships, giving brands control over the range of products
offered on the marketplace and access to Debenhams' significant
customer base
-- Growing Debenhams' product categories and expanding its supplier partnerships
2. Boohoo's entry into the beauty, sports and homeware market
-- Entering the beauty market at scale - Debenhams is one of the
UK's leading prestige beauty retailers across make-up, skincare and
fragrance
-- Debenhams has 6 million beauty shoppers and 1.4 million Beauty Club members
-- Opportunity to extend partnerships into new categories such as sport and homeware
3. Enhanced revenue growth opportunities across the Group
-- Significant opportunity to leverage Debenhams' customer
database and develop the platform for international markets in the
future
-- Debenhams offers an additional route to market for the Group's existing brands
-- Extending the Group's brand portfolio through the acquisition
of Debenhams' pureplay own brands including Maine, Mantaray,
Principles and Faith
Key Transaction Details
Debenhams is expected to relaunch on the Group's platform in Q1
FY22. In order to allow for the winding down of Debenhams'
operations, Debenhams will continue to operate its website for an
agreed period before the relaunch on the Group's platform and a
licence has been granted to allow for the winding down of
Debenhams' retail stores (when they are in a position to re-open)
for an additional period. The Transaction will be financed through
the Group's existing cash balance, which stood at GBP386.9m on 31
December 2020. The Group will only be acquiring the brands and
associated intellectual property rights - the Transaction does not
include Debenhams' retail stores, stock or any financial
services.
Financial Information
In Debenhams' most recent financial year to 31 August 2020, its
online business generated unaudited online net revenues of
approximately GBP400 million, via the following operating
models:
-- Marketplace: Approximately 25% of the online revenue (primarily fashion and homewares)
-- Beauty: Approximately 20% of the online revenue via a traditional wholesale model
-- Own brand fashion: Approximately 25% of the online revenue
(key brands include Maine, Mantaray, Principles and Faith)
-- Wholesale inventory: Approximately 30% of the online revenue
(bought from third-party brands, including fashion, sport and
homeware), which will not continue to operate under the Group's
ownership
The Transaction is not expected to contribute to the Group's
revenues over the remaining five weeks of the current financial
year (FY 2021), and is expected to incur modest start-up losses.
The Group will provide a further update at its Full Year results in
early May 2021.
Other Financial Information
In its most recent financial year to 31 August 2020, Debenhams
generated unaudited Gross Transaction Value of GBP1.524 billion and
unaudited EBITDA of GBP12.7 million. These figures include all
revenues and associated costs for store-based and international
operations.
Investor and analyst audio webcast
boohoo group plc will today host an audio webcast and conference
call for analysts and investors at 8.30am GMT via the following
link:
Audio webcast:
https://webcasting.brrmedia.co.uk/broadcast/600add34efe97358c10a2491
UK dial-in: +44 (0)330 336 9411
Participant Pin Code: 9203086
Enquiries
boohoo group plc
Neil Catto, Chief Financial Officer Tel: +44 (0)161 233
2050
Alistair Davies, Investor Relations Tel: +44 (0)161 233
2050
Clara Melia, Investor Relations Tel: +44 (0)20 3289
5520
Zeus Capital - Nominated adviser and
joint broker
Nick Cowles/Andrew Jones (Corporate Finance) Tel: +44 (0)161 831
1512
John Goold/Benjamin Robertson (Corporate Tel: +44 (0)20 3829
Broking) 5000
Jefferies - Joint broker
Philip Noblet/Max Jones Tel: +44 (0)20 7029
8000
Buchanan - Financial PR adviser boohoo@buchanan.uk.com
Richard Oldworth / Kim Looringh-van Beeck Tel: +44 (0)20 7466
/ Toto Berger / Sophie Wills 5000
About boohoo group plc
"Leading the fashion eCommerce market"
Founded in Manchester in 2006, boohoo is an inclusive and
innovative brand targeting young, value-orientated customers. Since
2006, boohoo has been pushing boundaries to bring its customers
up-to-date and inspirational fashion, 24/7. boohoo has grown
rapidly in the UK and internationally, expanding its offering with
range extensions into menswear, through boohooMAN.
In early 2017 the Group extended its customer offering through
the acquisitions of the vibrant fashion brand PrettyLittleThing,
and free-thinking brand Nasty Gal. In March 2019 the Group acquired
the MissPap brand, in August 2019 the Karen Millen and Coast brands
and in June 2020 the Warehouse and Oasis brands, all complementary
to the group's scalable, multi-brand platform. United by a shared
customer value proposition, our brands design, source, market and
sell great quality clothes, shoes and accessories at affordable
prices. These investment propositions have helped us grow from a
single brand, into a major multi-brand online retailer, leading the
fashion eCommerce market for 16 to 40-year-olds with a global
presence. As at 31 August 2020, the Group had just over 17 million
active customers across all its brands around the world.
In January 2021, the Group acquired the intellectual property
assets of Debenhams, with the goal of transforming a leading UK
fashion and beauty retailer into an online marketplace through a
new capital light and low risk operating model that is
complementary to the Group's highly successful direct-to-consumer
multi-brand platform.
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