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Author: Alan LittleDate: 2021-02-09

Boohoo (BOO) -5% following £25m deal for Arcadia brands

Online fashion retailer Boohoo (BOO) closed 5% down in London on Monday after it announced a £25m deal to acquire the Dorothy Perkins, Burton and Wallis brands from the Arcadia retail group. 


Boohoo will now start the process of integrating the brands and online businesses onto its digital platform, but it won’t save the 214 UK stores and its 2,450-strong workforce. 


Boohoo decided to swoop just a month after it bought the Debenhams brand, following Arcadia’s recent struggles. 


The once dominant retail group fell into administration last year and its Topshop and Miss Selfridge brands were snapped up by rival ASOS (ASC) last week.  


Boohoo believes that the latest deal will enable it to drive growth across a broader set of demographics, with the trio of brands having generated £428m in revenue for the year to August 2020. 


Chief executive John Lyttle said that the acquisition would ensure that “heritage is sustained” as he talked up the company’s ability to bring in popular brands.   


Hargreaves Lansdown analyst Susannah Streeter said that Boohoo and ASOS have evolved from digital upstarts to be the “great disruptors in fashion”. 


She added: “This purchase is part of a grand master plan by Boohoo to become the UKs largest retail marketplace and propel its international expansion.” 


In January, Boohoo paid £55m for the Debenhams brand and intellectual property, and is planning to relaunch on its tech platform by May.  


Analysts at Peel Hunt said that it could take Boohoo some time to scale the new online platform, but forecast sales of +£100m across its newly acquired brands by early 2023.  


Following news of the deal, Boohoo shares went into negative territory on Monday and eventually finished 4.77% lower at 347.50 GBX. 




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