UPDATE: Boohoo buys Coast and Karen Millen
Written by Peter Walker
Boohoo has acquired the brands, intellectual property and online business of Karen Millen and Coast in a pre-pack administration deal worth £18.2 million.
This will result in 62 immediate job cuts, while all other staff members in Karen Millen and Coast’s 1,100-strong workforce are now at risk of redundancies.
Earlier today, a statement explained that Deloitte restructuring partners Rob Harding and Richard Hawes were appointed as joint administrators to facilitate a sale.
The two High Street fashion retailers together have 32 stores and 177 concessions across the UK. Coast also has concessions in the Middle East and Asia.
Karen Millen’s holding company lost £5.7 million in the year ending February 2018, after losing £11.9 million in the previous financial year. Deloitte was recently hired to assess its options and has advised a sale.
Meanwhile, many of Coast’s concessions are located in Debenhams and House of Fraser department stores, which have been forced to close branches over the last year. Last October, Coast's webiste was bought by Karen Millen after the chain collapsed into administration.
Boohoo’s fast fashion offering includes PrettyLittleThing, Nasty Gal and MissPap, and in June it reported a 39 per cent sales rise in the three months to 31 May.
Emily Salter, retail analyst at GlobalData, said that the group seems an unlikely suitor for premium womenswear brands Karen Millen and Coast – a far cry from its previous acquisitions of MissPap and Nasty Gal, which both operate in the area of the 16 to 24 year-old market.
“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 – arguably, the brands would fit better into Phillip Day’s portfolio due to the similar target demographic and High Street presence of the brands.
“Boohoo is only interested in the online businesses of the brands, and though Coast now only has a physical presence in the form of concessions, the loss of this will be detrimental to sales,” she continued, adding that stores are important for Coast and Karen Millen due to the higher value of products, so operating as an online pureplay is likely to significantly increase return rates.