The online fashion retailer Boohoo is to rename itself Debenhams, the department store brand it bought out of administration four years ago, after sales from its young fashion labels sank more than a fifth amid heavy competition from the likes of Shein.
Dan Finley, the chief executive of the online fashion specialist, said sales for its founding brand Boohoo, as well as MAN and Pretty Little Thing, slid by 21% to £947m as “we lost our way”.
Boohoo had benefited from the rise in online shopping during the Covid-19 pandemic but has since struggled to compete with fast-fashion rivals such as Shein and Temu and a shift to buying secondhand clothes among teens and twentysomethings.
The company said the turnaround of Debenhams provided the blueprint for a revival of Boohoo and Pretty Little Thing, lauding its technology and lean operating model. For that reason, it has decided to rebrand itself as Debenhams Group with immediate effect.
Debenhams, founded as a single store in London in 1778, disappeared from the high street in 2021 after Boohoo bought the brand, but not its shops, shortly after the department store chain collapsed.
“Debenhams is back,” said Finley. “The iconic British heritage brand, bought out of administration, has been successfully turned around. Rebuilt for the future and transformed into Britain’s leading online department store.”
Finley admitted that the company had made mistakes as its younger brands struggled. “At the time of greatest competition, when the likes of Shein came into the market, we diverted investment from our proposition and marketing into warehouses and infrastructure,” he said.
Finley still sees “significant potential” in those brands but a turnaround could “take some time”.
He said “self help” was needed during “a clearly challenging time for the UK economy and in particular UK retail and especially online retail”.
Debenhams includes the labels Wallis, Burton, Misspap, Coast, Oasis, Dorothy Perkins and Warehouse, which have been turned around, Boohoo said.
The group reported a 16% drop in revenue to £1.2bn and expects to report adjusted underlying profits of about £40m. The group has already reduced costs by £50m through cuts to staff numbers, including 200 at its Manchester head office, shutting its US distribution centre and writing off £40m in surplus stock from its young fashion brands.
After Boohoo announced a strategic review in October and the surprise departure of chief executive John Lyttle, analysts had been expecting a break-up of the retailer, saying it was likely to sell Karen Millen and Debenhams, to focus on younger shoppers.
Boohoo bought Karen Millen for £18.2m in 2019 after its collapse and acquired Debenhams in 2021 for £55m, turning them both into online-only brands.
He said the future of the group’s portfolio of labels was still “under review” and did not rule out the potential sale of some labels.
The company has appointed the finance director, Phil Ellis, as chief financial officer, replacing Stephen Morana with immediate effect.
Boohoo last year faced a bruising public battle with the billionaire Sports Direct founder, Mike Ashley, whose Frasers Group owns a 27% stake in the struggling fashion retailer. Boohoo shareholders blocked Ashley and an associate from joining its board in December in a blow to his attempt to control the business.
Boohoo’s shares, which have fallen by about a fifth since the start of the year, fell 4% on Tuesday.
