Online fashion retailer Boohoo is considering a major restructure, which could involve breaking down its business, whose brands include Debenhams, Karen Millen, and PrettyLittleThing. The review followed an analysis that concluded the company’s business was “fundamentally undervalued.” Boohoo was quickly affected by the surge to online shopping during the pandemic and has since been struggling to compete with companies like China’s Shein and Temu. Analysts predict Boohoo may offload Debenhams and Karen Millen to allow it to concentrate on a younger target market.
Investment director at AJ Bell, Russ Mould, claimed that the “starting gun has been fired on the break-up of Boohoo.” Retail analyst Catherine Shuttleworth added that fast-fashion firms were facing pressure due to customers making different choices and thinking more sustainably. Boohoo purchased Karen Millen for £18.2m in 2019 and Debenhams three years previously for £55m. Ms. Shuttleworth stated that such acquired brands “haven’t had the impact on shoppers” that the business had expected.
Although Boohoo’s youth brands such as boohoo.com, boohooMAN, and PrettyLittleThing have been struggling, the company reported that it expects improvement by the second half of its financial year. At the same time, it also announced that its CEO, John Lyttle, will be leaving. In the last six years, the brand has attempted to move beyond fast fashion, and Lyttle claimed that Boohoo was aiming to develop more sustainability practices.
However, in 2023, a BBC Panorama investigation found that Boohoo had broken promises to make its clothes fairly and ethically. The brand was seen to put pressure on its suppliers to drive down prices, even after deals had been made. Boohoo responded by stating that it was experiencing significant inflation costs and had asked its suppliers to reflect this in their pricing. Earlier in 2021, the firm was discovered to have mislabelled some clothes, claiming they were made in the UK when produced in South Asia. Boohoo regarded the mistake as an isolated incident and partly due to a misinterpretation of fashion industry labelling rules.
Finally, commenting on Boohoo’s recent struggles, Ms. Shuttleworth added that the core Boohoo shopper had matured, and younger generations prefer in-store shopping, looking to alternative brands for inspiration
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