Online fashion retailer Boohoo (BOO.L) has bought the Dorothy Perkins, Wallis and Burton brands from collapsed retail group Arcadia for £25.2m ($34.5m). The move will result in some 2,450 job losses.
Boohoo’s stock was down roughly 3% as markets opened in London on Monday morning.
“Under the terms of the transaction, boohoo will acquire the brands, intellectual property and inventory of the three brands for a cash consideration of £25.2m and will also take on certain liabilities for forward committed stock orders,” administrator Deloitte said in a statement.
About 260 employees across all three brands, including design, buying, merchandising and digital, will transfer to Boohoo.
All 214 Burton, Dorothy Perkins and Wallis stores, already closed due to lockdown restrictions, are not part of the deal and will be permanently shut down.
Boohoo CEO John Lyttle said “acquiring these well-known brands in British fashion out of administration ensures their heritage is sustained, while our investment aims to transform them into brands that are fit for the current market environment.”
“We have a successful track record of integrating British heritage fashion brands onto our proven multi-brand platform,” he added.
Sarah Riding, retail partner at law firm, Gowling WLG, noted that "while the employment and store losses are regrettable, the retainment of staff focused on supply chain design and digitalisation promises much as far as preserving the brand names and their lineage is concerned.”
“However there is an inherent risk that, if poorly executed, the goodwill in these names could evaporate quickly, so all eyes will be on how these acquisitions are handled,” she added.
Arcadia will provide transitional services including distribution and certain head office functions as part of the integration of the brands within boohoo over the coming months.
Completion of the transaction is expected on 9 February.
Boohoo said the deal will help it to grow its market share across a broader demographic as the three brands collectively had more than two million active customers in 2020. It said it also strengthens its position “as a leader in the global fashion e-commerce market with over 15 brands across the group’s scalable multi-brand platform”.
All Arcadia brands have now been sold: Topshop, Topman, Miss Selfridge and HIIT were picked up by ASOS (ASC.L) and Evans went to to City Chic.
When Arcadia collapsed, it threw the future of 13,000 jobs into doubt. In all of these deals, the purchase did not involve taking on the shops or the staff that work in them, resulting in significant job losses.
In total, these sales together with other asset realisations, have raised proceeds of over £500m for the benefit of creditors, Deloitte said.
The process to generate proceeds from the group’s remaining assets, principally from its property portfolio, is ongoing, it added.
Last week, Boohoo also sealed a deal to buy the Debenhams brand and website for £55m. But, the deal does not include the retailers remaining 118 shops leaving around 12,000 jobs at the 242-year-old department store at risk.
WATCH: Boohoo to pay £25m to complete break-up of Sir Philip Green’s Arcadia