Boohoo could become the “UK’s largest marketplace” after its acquisition of Debenhams sent shares skyrocketing, according to analysts.
Boohoo’s shares jumped nearly five per cent this morning after it agreed to acquire embattled high street giant Debenhams in a deal worth £55 million.
The deal will see Boohoo close all of Debenhams’ remaining 118 physical stores, leading to thousands of job losses, but work its considerable online operations into its own stable of brands.
According to financial heavyweight Jefferies, Boohoo has “bought a lot of asset for £55 million”.
It added that the brand’s recent financial troubles make it easy to forget just how big Debenhams is, both online and offline.
“The website has (circa) 300 million UK website visits per annum, there are 6 million Debenhams beauty shoppers, and the brand’s peak 2020 pre-Christmas search index (GoogleTrends) was seven times that of Boohoo itself,” Jefferies said.
Hargreaves Lansdown’s senior investment and markets analyst Susannah Streeter pointed out that £55 million was relative pocket change for Boohoo, which had a cash balance of £386.9 million at the end of 2020.
“Boohoo aims to break into the retail big time with this deal,” she said.
“Boohoo is turning its back on Debenhams entire store estate, seeing little value in bricks and mortar stores, as the shift to digital shopping intensifies during the pandemic.
“Instead it believes that the brands and website will help it create the UK’s largest marketplace and position it to propel into international expansion.
“It sees acquiring the home, beauty and sports assets sold by Debenhams as a big prize, allowing it to enter new markets, and expand from its pure fashion base.”