Boohoo rebrands as Debenhams
Boohoo, the struggling online fashion retailer, has renamed itself Debenhams Group.
The company, which has been locked in a battle with its largest shareholder Mike Ashley’s Frasers Group over direction and performance, announced a strategic review last year after the departure of chief executive John Lyttle.
His successor Dan Finley said on Tuesday that a turnaround of Debenhams was now complete and the online department store’s updated business model now accounted for the majority of group profitability.
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Boohoo acquired only the name and website operations from administrators after debt-laden Debenhams, which had 123 stores and 12,000 staff, collapsed in 2020 after COVID shutdowns hit the economy.
Frasers had been its largest shareholder but was wiped out when its advances were spurred.
Frasers built up its stake in Boohoo in the wake of that defeat and has since failed, in January this year, in its efforts to oust Boohoo’s co-founder and architect of the Debenhams purchase, Mahmud Kamani, from the board.
Mike Ashley was the largest shareholder in Debenhams before its collapse and is Boohoo’s largest investor. Pic: Reuters
Boohoo’s rebrand follows a huge fall from grace on the back of several headwinds.
It had been among the big winners in the online fast fashion revolution, but its market value has collapsed since it acquired the Debenhams name in 2021.
It’s worth around £340m today, down from a peak above £5bn.
Not only has competition – and cheaper competition at that – hit demand, but Boohoo has also struggled with supply chain disruption and rising returns.
It has moved to bolster profitability by cutting costs, including jobs.
Boohoo said the marketplace-led, stock-lite, capital-lite Debenhams had “transformed” its fortunes.
“Our ongoing business review has confirmed that Debenhams, its business model and its technology is at the epicentre of our group going forward,” Boohoo said.
It added that it sees a clear path to Debenhams becoming a business in the medium term with multi-billion pound gross merchandise value and a core earnings margin on net sales of about 20%.
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Boohoo also confirmed that Phil Ellis, the current finance director of Debenhams and managing director of DebenhamsPay+, would become its group chief financial officer and a member of the board.
He replaces Stephen Morana with immediate effect.
Investors appeared to have concerns when shares fell by more than 6% at the open, though they later turned positive.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said of the update: “It’s no secret that Boohoo has been struggling, and a name change doesn’t change the fact that sales are falling, down 16% in the brief trading update tucked away at the bottom of today’s release.
“Reviving the group’s youth fashion brands is a key challenge, and it’s not clear that bringing back a legacy brand name will do much to help.”
Frasers declined to comment.