Popular internet fashion retail firm, Boohoo has agreed to purchase Debenhams’ online business, in a move which would see the closure of the remaining high street shops of the department store chain, cite sources familiar with the matter. The transaction is expected to be announced this week and the purchase price is estimated to be nearly £50 million.
It has been reported that Debenhams, the 243 years old department store chain, entered administration in April 2019 and had been trying to find a buyer since last summer, however, its administrators have stated that they did not receive any deliverable proposal during its liquidation in December. As of that month, it had 124 stores across the UK.
Apparently, Debenhams’ finances had been quivering even before the pandemic and with increased shift from high street shopping to online platforms, its finances were badly hit by retail closures imposed by the government as a part of its preventive measure to curb the spread of coronavirus during spring.
As per the credible sources, the liquidation at the start of December came into the picture after JD Sports chain left the rescue talks due to the collapse of Arcadia, the fashion empire of Sir Philip Green. Reportedly, Arcadia had made more concessions for Debenhams than any other retailer and has recorded the annual sales of around £100 million of clothing through Debenhams retail outlets.
While the future of the two retailers is believed to be closely interlinked, one of the suppliers stated in December that losing Arcadia was a severe blow to Debenhams and vice-versa.
The Boohoo deal is likely to indicate that the rest of Debenhams, which employs more than 10,000 people, will now be split up. Boohoo had reportedly come under fire during the pandemic after an investigation revealed last year that the workers in parts of its supply chain in Leicester were seemingly being paid a meager amount of £3 to £4 an hour. Remarks had also been made that the suppliers had forced employees to continue working even during the constricted conditions at the time of first Covid lockdown.