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Boohoo considers break-up of business amid struggling sales

With the rise of competitors like Shein and secondhand platforms like Vinted and Depop, the landscape is increasingly complex.

Boohoo considers break-up of business amid struggling sales

ONLINE fashion retailer Boohoo, which is known for its trendy offerings and rapid growth, is reportedly exploring a potential break-up of its business.

The move comes in response to mounting pressure from shareholders as the company grapples with a significant decline in share prices and increasing financial losses, reported the Times.


Since its inception in 2006, Boohoo has positioned itself as a leader in the fast-fashion market, boasting popular labels such as PrettyLittleThing, Karen Millen, and Debenhams.

However, the company’s fortunes have sharply declined post-pandemic, with fierce competition and a resurgence of physical retail taking a toll. Over the last five years, Boohoo's share price has plummeted by more than 85 per cent, prompting investors to call for drastic measures to rejuvenate the brand.

Reports indicate that key shareholders are urging Boohoo’s leadership to consider spinning off its more successful brands.

Names like Debenhams and Karen Millen, which still hold value, could be sold or separated from the struggling fast-fashion divisions, including Boohoo itself and PrettyLittleThing. Insiders suggested that the combined value of these brands may exceed the current market cap of the entire group, highlighting a potential strategy for recovery.

“There’s potential value in breaking up the business,” one source said. “The sum of the parts at Boohoo is greater than the whole.” This sentiment is echoed by many investors who feel that separating successful segments could lead to improved shareholder returns.

Boohoo co-founders Mahmud Kamani and Carol Kane are reportedly evaluating all available options.

According to sources close to the company, Kamani has been attentive to investor feedback and is considering all strategic paths as the firm heads into the critical Christmas trading season.

Founded in Manchester, Boohoo initially thrived on the rise of online shopping, completing a successful initial public offering (IPO) in 2014. The company rapidly expanded its portfolio by acquiring other brands, including Misspap, Karen Millen, and, more recently, high-street names like Dorothy Perkins and Debenhams. Yet, the online-only model has faced challenges as consumers increasingly returned to brick-and-mortar shopping.

For the year ending February, the company reported net debts of £95 million, a stark contrast to the previous year's cash reserves. Losses widened to £160m, with sales declining to £1.8 billion. The company has also made the tough decision to close its US warehouse in Pennsylvania, which it once touted as a transformative move for its North American operations.

This closure not only highlights Boohoo's struggle to penetrate the competitive US market but also points to a broader issue of misjudging consumer demands and operational feasibility.

Analysts have criticised the brief lifespan of the US warehouse, suggesting it reflects a lack of understanding of the American retail landscape.

Despite the setbacks, Boohoo remains optimistic about its potential in the US market. The company is exploring new partnerships with major American brands and continues to seek innovative routes to market for its various labels, reported Reuters.

The outlook for its US operations remains cautiously optimistic, particularly as it pivots back to fulfilling orders directly from the UK.

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