Boohoo is planning a major restructure that could see the break-up of the struggling online fashion firm whose brands include Debenhams, Karen Millen and PrettyLittleThing.
The company said it was reviewing options after concluding that its business remained “fundamentally undervalued”.
While Boohoo benefitted from the surge to online shopping during the pandemic, it has subsequently struggled against the likes of China’s Shein and Temu.
Analysts said Boohoo was likely to focus on offloading Debenhams and Karen Millen to allow it to focus on a younger target market.
“The starting gun has been fired on the break-up of Boohoo”, said Russ Mould, investment director at AJ Bell.
“Selling Karen Millen and Debenhams is the obvious starting point, leaving Boohoo with a sharper focus on a younger target market”.
Retail analyst Catherine Shuttleworth added that fast-fashion firms were “under pressure” with shoppers thinking more sustainably and “making different choices”.
Boohoo bought Karen Millen for £18.2m in 2019 and three years ago it took on department store brand Debenhams for £55m.
“Acquired brands like Debenhams and Karen Millen, now purely online players, haven’t had the impact on shoppers that the business might have liked”, said Ms Shuttleworth.
Boohoo admitted on Friday that its youth brands were struggling, including boohoo.com, boohooMAN and PrettyLittleThing, but said it expected that to improve in the second half of its financial year.
Meanwhile, the company said its chief executive, John Lyttle, would be leaving. He joined the company six years ago from Primark.
Under Mr Lyttle, the company has attempted to shift its image away from fast fashion. In 2021, he told the BBC that Boohoo was not a “throwaway fashion brand” and the firm was aiming to be more sustainable.
But in 2023, a BBC Panorama investigation found the firm had broken promises to make its clothes fairly and ethically. An undercover reporter saw evidence of staff pressuring suppliers to drive prices down, even after deals had been agreed. Boohoo said at the time it had experienced significant cost inflation in the previous year and as costs had started to come down, it asked suppliers to reflect this in their pricing.
Earlier this year, the firm was found to have mislabelled some of its clothes, claiming they were made in the UK when they were actually made in South Asia. Boohoo said it was an isolated incident, which was down to a misinterpretation of labelling rules.
On Friday, the company reported that its sales had fallen by 15% to £620m for the six months to the end of August. Trade tumbled across the UK, the US and internationally.
Analyst Clive Black at Shore Capital said the firm’s core fast fashion business was in decline and that Shein and Temu were providing fierce competition.
“Facing the future without a generally very well-regarded CEO does little to build comfort or joy too,” he said.
“All in all a bit of real boo hoo for its shareholders.”
