Karen Millen is a welcome extension to the Boohoo Group, reducing its “reliance on the value end of the market” and stretching its pricing architecture, retail analysts have told Drapers.
Boohoo bought the online arm of and all associated IP rights for Karen Millen and Coast for £18.2m in a pre-pack administration yesterday. A total of 62 immediate redundancies have been made.
The retailers employ a total of 1,100 people in the UK across 32 stores, 177 concessions and its London head office. UK stores and the international arm of the business will continue trading in the short term.
The etailer’s previous acquisitions, PrettyLittleThing in December 2016, US etailer Nasty Gal in 2017, and women’s fast fashion etailer MissPap in March, were more aligned to its value offering, however, analysts said Karen Millen could bring new customers to the etailer.
“There’s no point having four horses in their stable that are exactly the same. Karen Millen gives them variety and a new circle of customers,” said Peel Hunt retail analyst John Pritchard.
“It would attract a higher price point and more mature clientele. [They’re] not going to cannibalise or disrupt the other brands in the group just by having another one.”
Samantha Marie Dover, senior retail analyst at Mintel, agreed: “It will add a much more premium position for Boohoo, but that will reduce its reliance on the value end of the market. It will be an opportunity to broaden out that pricing architecture for both brands.
“[Boohoo] is very good at engaging with its customers, so it will be interesting to see whether they can use their marketing expertise to replicate that at a higher price point and rebuild the appeal of these brands among younger customers without having to resort to discounting.”
However, while she agreed that Boohoo’s “strong business platform” would be an asset if rolled out across Karen Millen and Coast, Emily Salter, retail analyst at GlobalData, warned the new owner could alienate Karen Millen’s existing customer base.
“It’s hard to see how [Boohoo] is going to generate rapid growth from Coast and Karen Millen because they’re already well established,” she said. “If they reduce the price points to attract younger customers, it would risk devaluing the business slightly because it could be seen as devaluing the proposition.”