LONDON — Boohoo Group has acquired the online businesses and intellectual property of British retail brands Karen Millen and Coast for 18.2 million pounds. Boohoo did not buy any of the high street stores and concessions.
The two brands were recently put up for sale by parent company Kaupthing, an Icelandic bank.
Boohoo’s purchase left many shop-floor workers fearing the future since 62 job losses have already been announced. At the moment, Karen Millen and Coast will continue their retail store operations in the U.K. and internationally. In the U.K., the two brands operate 177 concessions and 32 stores and employ around 1,100 people.
Deloitte, which handled the deal, cited the challenges of the British high street. “Unfortunately, it has been necessary to announce 62 immediate redundancies. Like many high street retailers, Karen Millen has suffered from high product and other cost inflation, decreasing footfall, weaker consumer confidence and a complex global operation in an increasingly competitive market,” a statement said.
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Earlier this morning when Boohoo announced its interest in acquiring the two brands, Emily Salter, a retail analyst at Global Data, said it was an odd choice of acquisition.
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“The Boohoo Group seems an unlikely suitor for premium women’s wear brands Karen Millen and Coast, which have strong reputations for quality occasion wear. This 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,” she said.
The two fashion chains could not be more different from Boohoo, a fast-fashion online retailer aimed at a Gen Z customer that sells clothes at far lower price points than its two acquisition targets. The fashions at Karen Millen and Coast are more classic, not trend-driven and target an older demographic. Karen Millen bought Coast through a pre-pack administration deal in October 2018 and both brands were owned by Icelandic bank Kaupthing.
Boohoo Group has been growing its stable. In 2016, it acquired fast-fashion web site PrettyLittleThing for 3.3 million pounds and in 2017, the group acquired Nasty Gal for $20 million. In March, Boohoo purchased MissPap, another online retailer.
In January, it opened its new headquarters on Melrose Place in Los Angeles to focus on influencer marketing, “which has grown tenfold since we started this business in the U.S. For us we really want to be in the heart of what was happening in Los Angeles from an influencer standpoint,” said Natalie McGrath, vice president of marketing at Boohoo.
While the group has been playing to its online strengths, Salter argued this may be detrimental to Karen Millen and Coast.
“Boohoo is only interested in the online business of the brands. Stores are important for Coast and Karen Millen due to the higher value of products, so operating as an online pure play is likely to significantly increase return rates. Although Coast now only has a physical presence in the form of concessions, the loss of this will be detrimental to sales,” Salter said.
She added that Boohoo’s social media expertise could revive the two British brands, as it did with PrettyLittleThing and Nasty Gal. “The group excels at marketing, especially on social media, to generate awareness and a buzz around its brands, so should use this strategy to inject renewed life into Coast and Karen Millen if its offer is accepted,” she said.
In its statement on Tuesday, Boohoo said it believes “the online business of Karen Millen and Coast would represent highly complementary additions to its scalable multibrand platform and extend the group’s offer as part of its vision to lead the fashion e‐commerce market globally.”