Boohoo’s Karen Millen and Coast purchase “risks devaluing” both
Boohoo’s acquisition of Karen Millen and Coast’s online operations will prove “hard” for the ecommerce fashion giant, according to GlobalData.
Karen Millen and Coast’s online operations and intellectual property were officially acquired by Boohoo in a pre-pack administration deal worth £18.2 million yesterday.
Analysts have since cast doubt on the tie-up, questioning how the fast fashion ecommerce giant Boohoo will be able to integrate the more premium occasion-focused brands into its operations.
“The Boohoo group seems an unlikely suitor for premium womenswear brands Karen Millen and Coast, a far cry from its previous acquisitions of MissPap and Nasty Gal which both operate in the area of the market it specialises in – fast fashion for 16-24-year-olds,” GlobalData’s retail analyst Emily Salter said.
Salter argues that not only is the pairs’ demographic largely at odds with Boohoo’s, but that their “strong reputation for quality occasionwear” dramatically “contrasts to Boohoo’s focus on selling high volume of product quickly, offering frequent promotions, and using social media as an important marketing method.”
Karen Millen has a vast physical presence, trading from 1700 stores across 65 countries prior to the sale, however it is now thought that many if not all of these stores could now close.
Despite Boohoo’s purchase offering hope for its online operations, Salter argues this could in fact risk “devaluing Coast and Karen Millen as their success stems from high quality product and sophisticated designs, significantly different to the boohoo group.”
Instead, Salter suggests, these would have been more suited to more suited to Philip Day’s retail empire, which was recently involved in a bidding war for fashion brand Jack Wills, but eventually lost out to Mike Ashley’s Sports Direct.
“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,” she continued.
“The group excels at marketing, especially on social media to generate awareness and a buzz around its brands, so should use this strategy to inject renewed life into Coast and Karen Millen, if its offer is accepted.”