Boohoo Buys Remaining Arcadia Brands For £25.2M

British online fashion retailer Boohoo has put the final nail in the coffin of Sir Phillip Green’s Arcadia Group with the £25.2 million acquisition of the Dorothy Perkins, Wallis and Burton brands from Arcadia’s administrator, Deloitte.

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The purchase of the e-commerce and digital assets related to the three brands will allow Boohoo (BOO) to expand its market share and demographic base, according to Executive Chairman, Mahmud Kamani.

“We are delighted to announce the acquisition of the assets associated with the online businesses of the three established brands Burton, Dorothy Perkins and Wallis. Acquiring these well-known brands in British fashion out of administration ensures their heritage is sustained, while our investment aims to transform them into brands that are fit for the current market environment,” said Boohoo CEO John Lyttle.

The deal does not include the purchase of any of the stores, which means that thousands of workers employed in them will lose their jobs.

Arcadia went into administration in November as store closures, lockdown restrictions and a global shift to online retail amid the coronavirus pandemic left Arcadia with hundreds of millions of pounds in debt.

Boohoo’s goal is to transform leading UK fashion and beauty retailers into an online marketplace.

Additionally, it bought the intellectual property assets of the Debenhams brand and website for £55 million last month. (See Boohoo stock analysis on TipRanks)

Barclays analyst Alvira Rao reiterated her Buy rating on Boohoo two weeks ago and raised her price target to 510p from 425p. This implies upside potential of around 45% from current levels.

Rao believes that downsizing on the high street has provided Boohoo with headroom and that the risks of core brands slowing in the UK are exaggerated, adding that Boohoo’s abnormally high returns are sustainable.

Consensus among analysts is a Moderate Buy based on 4 Buys and 2 Sells. The average analyst price target of 434p suggests upside potential of around 23% over the next 12 months.

Boohoo receives a market neutral 7 out of 10 on TipRanks’ Smart Score, which implies that the company is expected to perform in line with market expectations.