Boohoo rebrands as Debenhams to revive struggling youth fashion labels

Strategic rebranding and turnaround efforts

Fashion e-tailer Boohoo is making a radical shift by rebranding as Debenhams as part of a plan to resuscitate its business in the wake of a steep decline in sales from its youth-focused brands. The company behind brands like Boohoo, MAN, and Pretty Little Thing has seen a 21% decline in sales to £947 million, largely due to aggressive competition from fast-fashion giants and a shift towards second-hand fashion among young consumers.

Dan Finley, the chief executive, admitted that the company had "lost its way" in times of intense competition. He went on, "When competitors such as Shein emerged, we focused more on infrastructure and logistics from our core brands and marketing, and that was a mistake."

Leveraging Debenhams success

The rebranding to Debenhams Group is driven by the turnaround triumph of the Debenhams brand, which was acquired out of administration by Boohoo in 2021 and rebranded as a digital retailer. Debenhams, founded in 1778, has been re-established with next-generation tech and a more efficient operating model, and it is now one of the best online department stores.

Finley highlighted the potential of this rebranding, citing, "Debenhams is back, and its success provides a blueprint for the revival of Boohoo and Pretty Little Thing. We see significant potential in our younger brands, but a full recovery may take time."

Financial performance and cost-cutting measures

Financially, the group recorded revenue of 16% less at £1.2 billion and hopes to post adjusted underlying profits of approximately £40 million. In a bid to reverse such losses, cost-cutting is being undertaken by Boohoo, including the reduction of employees, closure of its US warehouse depot, and writing off £40 million of overstock from its youth fashion brands.

The company has already saved £50 million through these initiatives. Finley emphasized the need for "self-help" at "a challenging time for the UK economy and retail sector, particularly online retail."

Portfolio review and leadership changes

The future of Boohoo's portfolio of brands, including Karen Millen and others, is under review. Finley did not rule out selling some labels, suggesting a strategic review to focus on core strengths.

As an additional step to strengthen and stabilize its business, Boohoo has promoted the new chief finance officer by removing Stephen Morana with immediate effect. Phil Ellis has occupied the role.

Boohoo's rebranding to Debenhams Group is a gamble aimed at addressing the problems of the young fashion business and capitalizing on the fortunes of the Debenhams brand. The focus on cost reduction and rebalancing is expected to put the company back in the market limelight and regain investor support. The coming months will determine if these measures will pay off and if Debenhams Group as a rebranded entity can be a sustained player.