FRP Advisory sells Debenhams in £55m deal
27 Jan 2021
Joint administrators from FRP Advisory, appointed to Debenhams Retail Ltd in a ‘light touch’ administration, have agreed a £55m cash deal for the brand and certain assets with online fast fashion specialist Boohoo group
27 Jan 2021
The move will see Boohoo group plc acquire the global rights to Debenhams brands and its websites, but the UK stores will shut, putting an estimated 12,000 jobs at risk.
The transfer will take full effect following the completion of the current stock liquidation programme, which is continuing online.
Debenhams, which has long been a significant presence on the high street as a fashion and beauty chain, also has an established online platform with approximately 300m UK website visits per year, putting it in the top 10 of retail websites by traffic.
Geoff Rowley and Alastair Massey from FRP’s restructuring advisory team, who are the joint administrators to Debenhams, said the deal will allow a new Debenhams-branded business to emerge under strong new ownership, including an online operation and the opportunity to secure an international franchise network that will operate under licence using the Debenhams name. The transaction does not affect Magasin du Nord in Denmark, which continues to operate independently.
Once Debenhams stores are able to reopen and the stock liquidation can continue in stores, the website will be operated by Boohoo. The closing down sale will continue in stores for several weeks until the stock liquidation is completed and the value of this stock will be retained for creditors. All the UK stores will then be permanently closed.
Geoff Rowley, joint administrator and partner at FRP, said: ‘We are pleased to have secured the future for this great brand, and to have created the opportunity for a new Debenhams-branded business to emerge in a different shape beyond the pandemic.
‘I expect that the agreement with Boohoo may provide some job opportunities but we regret that this outcome does not safeguard the jobs of Debenhams’ employees beyond the winding down period.
‘We are very grateful that they have worked tirelessly through this very challenging period and will continue to support the closing down sale. I’d also like to thank the management team, who have worked very hard throughout to protect the business and support us in delivering the best outcome for stakeholders.’
In a statement announcing the transaction, Boohoo said it represented ‘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’.
Boohoo indicated it intends to rebuild and relaunch the Debenhams platform, which the online fashion specialist will use to shift into new categories including beauty, sport and homeware.
John Lyttle, Boohoo CEO, 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.
‘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.’