Boohoo is planning a major restructuring that could see the breakup 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 is “fundamentally undervalued”.
While Boohoo benefited from a surge in online shopping during the pandemic, it later struggled against companies like China’s Shein and Teemu.
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.
“The sale of Karen Millen and Debenhams is the obvious starting point, allowing Boohoo to focus more on the younger target market.”
Retail analyst Katherine Shuttleworth said fast-fashion companies were “under pressure” as shoppers were thinking more sustainably and “making different choices”.
Boohoo bought Karen Millen for £18.2m in 2019 and three years ago it bought department store brand Debenhams for £55m.
“Acquired brands such as Debenhams and Karen Millen, who are now fully online players, have not made the impact on shoppers that the business would have liked,” Ms Shuttleworth said.
Boohoo acknowledged on Friday that its youth brands are struggling, including boohoo.com, boohooMAN and PrettyLittleThing, but said it expected improvement in the second half of the financial year.
Meanwhile, the company said its Chief Executive John Little is leaving the company. He joined the company from Primark six years ago.
Under Mr. Little, the business has attempted to shift its image away from fast fashion. In 2021 he told the BBC Boohoo Wasn’t a “Throwaway Fashion Brand” And the firm aimed to be more sustainable.
But in 2023, BBC Panorama investigation found Boohoo had broken its promise to make its clothes fairly and ethically. An undercover reporter saw evidence of employees pressuring suppliers to lower prices, even after the deal was agreed.
Boohoo said at the time that it had experienced significant cost inflation over the past year and as costs began to decline, it asked suppliers to reflect this in their pricing.
earlier this year, The firm was found to have mislabeled some of its clothes.Claiming that they were made in the UK when in fact they were made in South Asia. Boohoo said this was an isolated incident, caused by a misinterpretation of labeling rules.
On Friday the company said its sales had fallen 15% to £620m in the six months to the end of August. Trade declined in the UK, US and internationally.
Ms Shuttleworth said the core Boohoo buyer had “grown up”.
“The last generation is enjoying in-store shopping and looking to alternative brands for inspiration,” he said.
