Internet fashion retailer Boohoo has reportedly agreed to buy the online business of Debenhams, in a move which will see the department store chain close its remaining high street shops, according to sources close to the deal.
The transaction may be announced this week, according to the Financial Times. The newspaper said it understands the purchase price is likely to be around £50m.
The department store chain, which traces its roots back 243 years, entered administration in April 2019.
It had been trying to find a buyer since last summer, but its administrators said they had not received “a deliverable proposal” at the time of its liquidation in December. As of that month, it had 124 UK stores.
Debenhams’ finances, which had been shaky prior to the pandemic – owing to the shift away from the high street in favour of online shopping – were badly hit by retail closures imposed by the government to curb the spread of the virus in the spring.
The liquidation at the start of December came after the JD Sports chain walked away from rescue talks.
The sports retailer pulled out of the talks when Arcadia went under. Sir Philip Green’s fashion empire operated more concessions in Debenhams than any other retailer and is believed to have sold about £100m of clothing a year via Debenhams shopfloors.
The fate of the two retailers is believed to have been closely interlinked, with one supplier saying in December: “Losing Arcadia was a fatal blow to Debenhams and losing Debenhams was a fatal blow to Arcadia.”
Online giant Asos is understood to be the frontrunner to buy Arcadia’s Topshop, which is being auctioned off alongside the group’s other brands, including Dorothy Perkins, Burton and Miss Selfridge.
Arcadia, the biggest retail casualty of the pandemic, employed 13,000 people across 500 outlets and the Asos deal is likely to just be for Topshop’s online presence.
The Boohoo deal is likely to mean that the rest of Debenhams, which still employs more than 10,000 people, will now be split up, the FT reported.
Boohoo has come under fire during the pandemic after an investigation by the Guardian revealed last year that workers in parts of its supply chain in Leicester may be being paid as little as £3 to £4 an hour.
Allegations were also made that its suppliers forced workers to continue in cramped conditions during the first Covid lockdown.
The company accepted the recommendations of a report from Allison Levitt QC, which described its attitude to the plight of workers in the city as “inexcusable”.