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E-commerce

Boohoo to shut down physical side of Karen Millen and Coast

Online fashion group Boohoo acquired UK brands Karen Millen and Coast earlier this week, putting over a thousand jobs in question as the physical side of the brands is to be shuttered. 

Boohoo paid £18.2 million for the brands on the basis that the online portion of Karen Millen and Coast will be complimentary additions to its multi-brand platform.

“The acquisition of the online business of two great and renowned British brands in Karen Millen and Coast 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 e-commerce market,” Boohoo group chief executive John Lyttle said.

According to Boohoo, unaudited management information shows direct online sales from the two brands totalled £28.4 million for the year to February 2019. 

Administrators at Deloitte told The Guardian Karen Millen and Coast’s 32 stores and 177 department store concessions would only be kept open for a short time as stock is sold off.

“An unlikely suitor”

The acquisitions are a far cry from the online fashion group’s last few purchases, which were largely fast-fashion offerings for a younger demographic. 

Karen Millen and Coast have reputations for quality occasionwear targeting 25 to 34 year olds – “an unlikely suitor for premium womenswear brands,” said GlobalData retail analysis Emily Salter.

“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 tool.”

Salter stated that the acquisition may actually devalue Coast and Karen Millen, as the loss of the physical side of the business could be detrimental to reaching its core target market. 

“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,” Salter said. 

“[And], as Coast and Karen Millen are well-established brands, Boohoo is likely to find it hard to generate rapid revenue growth, in contrast to the impressive growth of PrettyLittleThing and Nasty Gal which were acquired as small, relatively unknown brands.”

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