Boohoo, the struggling online fashion retailer, has rebranded itself as Debenhams Group.
The company, which has been embroiled in a dispute with its major shareholder Mike Ashley’s Frasers Group regarding direction and performance, initiated a strategic review last year following the departure of CEO John Lyttle.
His successor, Dan Finley, declared on Tuesday that the transformation of Debenhams is now complete, with the updated business model of the online department store contributing significantly to the group’s profitability.
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Boohoo obtained only the name and website operations from administrators after the collapse of debt-ridden Debenhams in 2020, which had 123 stores and 12,000 employees, due to COVID-related shutdowns impacting the economy.
Frasers was the largest shareholder but suffered losses when its attempts were thwarted.
Following this setback, Frasers increased its stake in Boohoo, and in January of this year, failed in its bid to remove Boohoo’s co-founder and mastermind behind the Debenhams acquisition, Mahmud Kamani, from the board.
Boohoo’s rebranding comes in the wake of a significant decline in its fortunes due to various challenges.
While it was initially a major player in the online fast fashion market, its market value has plummeted since acquiring the Debenhams brand in 2021.
Its current value is approximately £340 million, a sharp drop from its peak above £5 billion.
In addition to facing stiff competition, including from lower-priced competitors, Boohoo has grappled with disruptions in its supply chain and increased returns.
To enhance profitability, the company has focused on cost-cutting measures, including job reductions.
Boohoo stated that the Debenhams model, which is marketplace-led, stock-lite, and capital-lite, has been instrumental in turning its fortunes around.
«Our ongoing business assessment has revealed that Debenhams, its business model, and its technology are central to the future of our group,» Boohoo remarked.
It also outlined a clear path for Debenhams to evolve into a multi-billion-pound business in the medium term, with a core earnings margin on net sales of approximately 20%.
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Boohoo also announced that Phil Ellis, the current finance director of Debenhams and managing director of DebenhamsPay+, will assume the role of group chief financial officer and join the board.
He will be replacing Stephen Morana with immediate effect.
Initially, investors expressed concerns as shares dropped by over 6% at the opening, but they later rebounded positively.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, commented on the update, stating: «It’s no secret that Boohoo has been facing challenges, and a name change does not alter the fact that sales are declining, down 16% according to the brief trading update included at the end of today’s release.
«Reviving the group’s youth fashion brands presents a significant challenge, and it remains uncertain whether reintroducing a legacy brand name will significantly impact the situation.»