LONDON — Boohoo is looking to drive its brand image upscale and confirmed Tuesday it has made an offer to acquire British retail brands Karen Millen and Coast. The company did not give further details, and said a further announcement would be made “when appropriate.”
The two fashion chains could not be more different than Boohoo, a fast-fashion online retailer aimed at a Gen Z customer that sells clothes at far lower price points than its two acquisition targets. The fashions at Karen Millen and Coast are more classic, not trend-driven and target an older demographic. Karen Millen bought Coast through a pre-pack administration deal in October 2018 and both brands are owned by Icelandic bank Kaupthing.
“The Boohoo Group seems an unlikely suitor for premium women’s wear brands Karen Millen and Coast, which have strong reputations for quality occasion wear. This contrasts to Boohoo’s focus on selling a high volume of product quickly, offering frequent promotions and using social media as an important marketing method,” commented Emily Salter, retail analyst at Global Data.
Boohoo Group has been growing its stable. In 2016, it acquired fast-fashion website Pretty Little Thing for 3.3 million pounds and in 2017 the group acquired Nasty Gal for $20 million. In March, Boohoo purchased MissPap, another online retailer.
In January, it opened its new headquarters on Melrose Place in Los Angeles to focus on influencer marketing, “which has grown tenfold since we started this business in the U.S. For us we really want to be in the heart of what was happening in Los Angeles from an influencer standpoint,” said Natalie McGrath, vice president of marketing at Boohoo.
While the group has been playing to its online strengths, Salter argued this may be detrimental to Karen Millen and Coast.
“Boohoo is only interested in the online business of the brands. Stores are important for Coast and Karen Millen due to the higher value of products, so operating as an online pureplay is likely to significantly increase return rates. Although Coast now only has a physical presence in the form of concessions, the loss of this will be detrimental to sales,” said Salter.
She added that Boohoo’s social media expertise could revive the two British brands, as it did with Pretty Little Thing and Nasty Gal. “The group excels at marketing, especially on social media, to generate awareness and a buzz around its brands, so should use this strategy to inject renewed life into Coast and Karen Millen if its offer is accepted,” she said.
In its statement on Tuesday Boohoo said it believes “the online business of Karen Millen and Coast would represent highly complementary additions to its scalable multi‐brand platform and extend the group’s offer as part of its vision to lead the fashion e‐commerce market globally.”