By guest author Elias Jahshan from Retail Gazette
- Karen Millen & Coast brands, IP & online business acquired by Boohoo in £18.2m pre-pack administration deal
- The acquisition results in 62 immediate job cuts while all other staff in 1100-strong workforce risk redundancies
- Karen Millen & Coast will continue to trade in-store for a short time as administration process continues
Boohoo has officially acquired the brands, intellectual property and online business of Karen Millen and Coast in a pre-pack administration deal worth £18.2 million.
The deal will result in 62 immediate job cuts, while all other staff members in Karen Millen and Coast’s 1100-strong workforce are now at risk of redundancies.
Earlieron August 6, Deloitte restructuring partners Rob Harding and Richard Hawes were appointed as joint administrators of Karen Millen and Coast to facilitate a sale.
Soon after their appointment, both brands and the intellectual property associated with the online business of Karen Millen and Coast were acquired by online fashion retailer Boohoo.
The fact that Boohoo could cherry-pick certain parts of the business indicates the insolvency process was a pre-pack administration.
It comes after Boohoo’s stock market announcement this morning (August 6) in which it confirmed a bid to acquire the online business of Karen Millen and Coast.
Coast had only been part of the Karen Millen family since December, when the latter acquired the former’s UK concessions portfolio and online business.
While the online business is saved, Karen Millen and Coast will continue to trade through its 32 stores and 177 concessions in the UK for a short time as an administration process continues.
The international arm of Karen Millen will also continue trading in the short term.
However, the administrators confirmed that the deal with Boohoo would lead to 62 immediate redundancies.
It is not yet clear how many of the remaining Karen Millen staff would be retained or made redundant.
Karen Millen and Coast were both put up for sale in June by Icelandic bank Kaupthing, the now-former parent company.
Boohoo buys Karen Millen Coast for GBP 18.2 million pre-pack administration 62 job cuts 1100 risk redundancies.
Kaupthing reportedly drafted in Deloitte to initially review options for Karen Millen and Coast after receiving a string of unsolicited takeover bids.
In the 52 weeks to February 2018, they posted a pre-tax loss of GBP 9.5 million on the back of £161.9 million of sales.
However, Karen Millen’s operating losses were slashed by 85 % to GBP 1.4 million in the same year, thanks to a turnaround strategy led by chief executive Beth Butterwick.
Despite this, Deloitte said that like many high street retailers, Karen Millen and Coast suffered from high product and other cost inflation, decreasing footfall, weaker consumer confidence and a complex global operation in an increasingly competitive market.
“As we continue to see, the retail trading environment in the UK remains extremely challenging,” joint administrator Rob Harding said.
“Karen Millen has been seeking to address the financial challenges that it faced by pursuing a sale of the business and, whilst a sale of the whole business has not been deliverable, the Boohoo transaction facilitates the survival of these iconic British brands through an online platform.
“We thank all employees and other key stakeholders for their support at this difficult time.”
Boohoo chief executive 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.”
Boohoo splashed out GBP 18.2 million to buy Karen Millen and Coast’s online business and IP
Boohoo is now the new owner of Karen Millen and Coast, although only their online business and IP. The future of their physical stores remains uncertain