Shoppers are fearing the end of ‘quality fashion’ after online retailer Boohoo made a offer for Karen Millen and Coast today – in yet another blow to the high street, with 1,100 jobs at risk.
The fast-fashion internet giant bought the online divisions of Karen Millen and Coast, after they briefly entered administration earlier today.
Boohoo snapped up both online businesses for £18.2million in a pre-pack deal. But Karen Millen and Coast’s 32 shops and 177 concessions remain in the hands of the administrators, leaving around 1,100 employees in the dark.
Reacting to the news, one shopper said: ‘Karen Millen is my favourite NUMBER ONE store. I buy 90 per cent of my clothes from there.
‘Quality and innovation on designs – unrivaled!! If Boohoo buys them out, then it’s over!!’
While another said: ‘Fact is online retailers are making money and the high street is struggling. Onliners have no brand credibility but lots of cash so good opportunity to buy that through acquisitions.’
A third said: ‘I love #KarenMillen and #Coast – the quality of their clothing is excellent. I do love #Boohoo too – but for everyday wear’.
Boohoo has steered clear of traditional ‘bricks and mortar’ retail since its inauguration in Manchester in 2006
Karen Millen snapped up Coast out of administration last year – a move that triggered the closure of all standalone Coast stores, but saved its concessions and a large chunk of its employees
Boohoo said it has acquired ‘the online business and all associated intellectual property rights from the administrators of Karen Millen’, which briefly entered into administration earlier today.
The online business, which already owns the PrettyLittleThing, Nasty Gal and MissPap brands, has steered clear of traditional ‘bricks and mortar’ retail since its inauguration in Manchester in 2006.
A spokesperson declined to say if Boohoo would retain any of the dress retailer’s staff. An initial 62 job losses have been announced as part of the deal, leaving over 1,000 in danger.
Administrators at Deloitte said the stores would continue to trade for a short time while they realise the company’s assets.
Karen Millen snapped up Coast out of administration last year – a move that triggered the closure of all standalone Coast stores, but saved its concessions and a large chunk of its employees.
Boohoo boss John Lyttle said: ‘The acquisition of the online business of two great and renowned British brands in Karen Millen and Coast represents another milestone in the Group’s growth story as it continues to invest in its scalable multi-brand platform and gain further share in the global fashion e-commerce market.’
Karen Millen’s online division made £28.4million last year.
During 2019 alone, Debenhams and L.K. Bennett have slumped into administration, while others like House of Fraser fight to keep stores open during the ongoing decline of the High Street.
2018 was one of the worst years for the retail sector, with nearly 85,000 retail jobs lost in the UK as businesses continued to go bust.
Boohoo said it was interested in buying the brands and online businesses – but made no mention of Karen Millen and Coast’s 32 shops and 177 concessions in its statement
Shoppers reacted to the news of the fashion outlets’ uncertain future, with one declaring: ‘Karen Millen is my favourite NUMBER ONE store. I buy 90% of my clothes from there’
Another said: ‘Fact is online retailers are making money and the high street is struggling. Onliners have no brand credibility but lots of cash so good opportunity to buy that through acquisitions.’
A third said: ‘I love #KarenMillen and #Coast – the quality of their clothing is excellent. I do love #Boohoo too – but for everyday wear’
Retail analyst Emily Salter said the Boohoo group seemed an ‘unlikely suitor’ for the premium womenswear brands
Independent retail analyst Nick Bubb said the deal ‘begs the question of what would happen to the shops and the click-and-collect model’.
However, he praised the move from Boohoo. ‘Management are to be applauded for trying to diversify into brands targeted at an older age group of customers,’ he said.
Conversely, Global Data’s UK research director Patrick O’Brien described it on Twitter as ‘a really strange move’ for a company that predominantly targets people aged 16 to 24.
He said: ‘Boohoo has made some great acquisitions, but these have been fellow pureplays to enhance its targeting of its young female demographic.’
Boohoo insisted that the online businesses ‘extend the group’s offer as part of its vision to lead the fashion e-commerce market globally’.
One customer said Boohoo trying to buy Karen Millen was ‘such a sign of the times’
Another joked that they could not see the high-end fsahion outlet Karen Millen selling £8 dresses
Karen Millen, known for its upmarket dresses, bought Coast out of administration last year
One customer speculated that Karen Millen was struggling because of its ‘unattainable price point’, telling them to ‘stop selling your Zara level dresses at Nicole Farhi prices’
Karen Millen, which previously belonged to Icelandic bank owner Kaupthing, drafted in advisers at Deloitte in June.
Deloitte kicked off the search for a new suitor as enduring tough conditions in the retail sector took its toll on the dress firm’s bottom line.
In its last financial year, the Karen Millen holding company lost £5.7million, narrowing its losses from £11.9million the year before.
Coast has also struggled, in part due to its locations in several Debenhams and House of Fraser stores, which have both had their own high street woes in recent years.
By comparison, boohoo revealed a 39 per cent jump in sales in the three months to May 31.
Emily Salter from GlobalData warned that the loss of a high street presence would be detrimental to sales.
Pictured: Kaz Crossley modelling for Boohoo
‘Stores are important for Coast and Karen Millen due to the higher value of products, so operating as an online pureplay is likely to significantly increase return rates,’ she said.
Salter added that the closure of concessions will also be another blow to embattled department stores, in particular Debenhams and House of Fraser.
News of the offer comes the day after Mike Ashley’s Sports Direct agreed to buy struggling fashion chain Jack Wills out of administration – a deal that threatens the future of around 100 high street shops and 1,700 jobs.
Boohoo shares closed up by 4 per cent to 239.50p.
Retail analysts at Jefferies said investors should welcome the decision.
They said: ‘Karen Millen and Coast are both strong UK brands, in our view, with distinctive premium ranges, including work wear and occasion wear, that would complement the existing group brands.
‘If acquired, we would expect Boohoo to keep the creative teams and brand marketing completely separate but seek to leverage its efficient sourcing, distribution and IT infrastructure to grow the business globally and make it more profitable.’
How Karen Millen became a high street fashion favourite
Karen Millen (pictured) set up her business with her partner Kevin Stanford in 1981
Karen Millen set up her business with her partner Kevin Stanford in 1981, taking out a £100 loan which they used to manufacture cotton shirts and sell them to their friends.
In 1983, the pair opened their first store in Maidstone, Kent, which was followed a few years later by other branches in South East England.
The brand expanded throughout the 1990s to become one of the most recognisable chain of stores on the UK High Street, with branches in countries including the United States, Indonesia, Austria and Russia.
Miss Millen, who was awarded an OBE in 2009, has three children and in 2017 sold her late Georgian house in Tonbridge, Kent, which boasts six bedrooms, a swimming pool, tennis courts, a football pitch and a lake.
The 55-year-old made £35 million in 2004 when Icelandic investor Baugor bought the business in a deal valued at £95 million.
She split from her partner Kevin Stanford a decade ago, more than 30 years after they co-founded the company together.
Since selling her stake in the company in 2004 the designer has set up two charities, Hope HIV and Teens Unite, which helps young people suffering from life-limiting diseases.
Eva Longoria and Laura Whitmore in Karen Millen outfits in 2010 and 2013
Bloodbath on the High Street: How shops in the UK went from bustling to bust
2018 saw one of the worst years for the UK High Street with retailers shutting their doors and plaguing homes across the country with many job losses.
And 2019 is heading in a similar direction with Debenhams and L.K. Bennett falling into administration.
Crisis hit brands such as House of Fraser and Marks & Spencer have been fighting to keep stores open while other retailers such as New Look pushed for a solution to stop store closures and job losses.
In 2018 nearly 85,000 retail jobs were lost in the UK as businesses continued to go bust as 1,000 retail business went into administration between January and September.
As well as this the number of retail outlets left empty was up by 4,400 in 2018 according to data from the Local Data Company.
House of Fraser (pictured above) is one of the crisis hit brands on the UK High Street
Marks & Spencer has been battling with the UK High Street and had previously struck a deal with Ocado to transform grocery shopping
Last year New Look announced it would be closing 85 stores across the UK
High Street giant Gap has also announced it will close 230 stores worldwide as its US parent company launches a massive restructuring programme.
The pressure on High Street retailers has hit an all-time high as they continue to try and keep up with the ever growing popularity of online shopping.
Online retailers are able to keep prices low as they don’t face the massive rental costs of physical stores or the staff rates.
While retailers battle the rise in online shopping they are also being forced to battle Brexit, as many supply chain routes and whether or not they will be available in a no-deal scenario have put added cost worries onto retailers as many consider stock piling their items or not importing them at all.
GAP (pictured above) also announced it was closing more than 200 stores as part of a worldwide restructuring programme
The rise in online shopping with companies such as Amazon has also put a strain on the High Street
Here are some of the big name retailers which have lost out as they face fierce competition from the rise of online shopping
The carpet retailer is closing 92 stores across the UK. These closures represent nearly a quarter of all UK Carpetright stores.
Toys R’ Us
The UK’s largest toy shop went into administration in February 2018, leading to an estimated 2,000 redundancies.
House of Fraser
The department store chain was on the verge of heading into administration but was rescued at the eleventh hour by Sports Direct owner Mike Ashley.
The electronics giant has gone bust, closing shops across the country and putting thousands of jobs at risk.
The baby and toddler chain is closing 60 shops across the UK putting up to 900 jobs at risk.
Poundworld announced it was going into administration on June 11 after talks with potential buyer R Capital broke down, putting 5,100 jobs at risk.
The DIY chain set to close 42 DIY outlets shut, putting around 1,500 jobs at risk.
Marks & Spencer
The retailer announced in May it plans to close 100 stores by 2022, putting hundreds of jobs at risk.
In August stores in Northampton, Falkirk, Kettering, Newmarket, New Mersey Speke, Stockton and Walsall all ceased trading.
Orla Kiely, the Irish fashion retailer collapsed in September and closed all its stores after a slump in profits.
In December HMV entered into administration with its flagship London Oxford Street having closed earlier this year.
Fashion brand L.Bennett announced it was filing for administration on March 1, 2019. Linda Bennett sent employees an email early in the morning to inform them of the news before it hit news outlets.
In March, Liam Gallagher’s Pretty Green filed a notice of intention to appoint Moorfields Advisory to handle insolvency problems across its UK stores. At the beginning of April 2019 JD Sports purchased the company, saving around 70 jobs.
Debenhams fell into administration in April with debts of £640million following three profits warnings last year.
The firm has 166 stores and employs 25,000 people but has announced plans for around 50 stores to close in the next two years, with 22 shutting by 2020, affecting 1,200 jobs.