Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
UK fast-fashion retailer Boohoo has renamed itself Debenhams Group four years after it bought the business from administration.
The Aim-listed company made the announcement on Tuesday amid an ongoing strategic review, which some analysts have said could lead to a break-up of the business.
Debenhams, the online department store, “is the driving force of the business and will lead the group recovery”, the company said.
It also named Phil Ellis as its new finance chief, replacing Stephen Morana with immediate effect.
Boohoo Group, which started out in Manchester in 2006, said the turnaround of Debenhams under chief executive Dan Finley was now complete and would provide “the blueprint for the wider turnaround” of the lossmaking group.
Its shares fell 3.3 per cent to 26p in morning trading in London, giving it a market capitalisation of just under £400mn.
The business is made up of Debenhams, which it bought from administration without the stores in 2021, and Karen Millen, both targeting a slightly older demographic. PrettyLittleThing, Boohoo and BoohooMAN, typically aim to sell to 16- to 25-year-olds.
Finley said the turnaround of its younger brands “will take time” and that they would become market places, similar to Debenhams, rather than selling only own-label products on their websites.
Selling third-party brands would require lower stock levels and working capital, he added, and would have a “really positive impact” on clothing returns. Returns are a thorn in the side for retailers because of the associated costs.
Other retailers such as Next and Marks and Spencer have started selling different brands on their websites.
Boohoo said Debenhams was growing rapidly, with a stock and capital-light model that was profitable and cash generative.
According to a trading update on Tuesday, total group revenue fell from £1.5bn to £1.2bn in the year to February, driven by weaker performance of its youth brands.
Chloe Collins, a retail analyst at GlobalData, said that although marketplaces continued to outperform within the retail market, she thought it “unlikely” to provide a major boost to Boohoo’s youth brands, particularly given “Shein’s marketplace ambitions”.
The company has lost almost 90 per cent of its value over the past five years after a boom in trading during the pandemic dwindled. It has had to grapple with falling sales, cost inflation and fierce competition from rivals such as Shein and Temu.
It has also had to fend off a recent attempt by Mike Ashley’s Frasers — its largest shareholder — to orchestrate a boardroom coup.
Frasers has previously called Boohoo “mismanaged” and criticised a £222mn refinancing, which it called a “catastrophe”.
Boohoo said on Tuesday that its business review was ongoing and a further update would be provided with its full-year results.
