Debenhams Group, the British retail conglomerate formerly known as Boohoo Group, is mulling the potential sale of PrettyLittleThing and the closure of another distribution center in a bid to drive a turnaround of the company’s declining fortunes.
Both moves, it said in its annual results late last month, are part of an “ongoing strategic review” to transform the ailing business that began with the appointment of current CEO Dan Finley last November. For the year ended Feb. 28, the Boohoo, Karen Millen and Nasty Gal owner saw pre-tax losses expand to nearly 264 million pounds ($355 million), up from 164 million pounds ($220 million) the year before.
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While it has “made significant progress under new leadership,” Debenhams Group said, there “remains much to do and many opportunities to realize.” The goal, it added, is to promote a “stock-lite, capital-lite, cost-lite, cash-generative model” as the foundation of its marketplace strategy. One-off costs due to “strategic decisions” such as the shuttering of its U.S. distribution center in 2024, amounted to 199 million pounds ($267 million). Debenhams Group credited its 42 million-pound ($56 million) EBITDA to “aggressive actions” such as the closure of its Daventry warehouse in January 2024, a 30 percent headcount reduction and a halving of stock.
The axing of the distribution center in Burnley, England, would result in the loss of more than 1,250 jobs as Debenhams Group “gradually transfers” its online fulfillment operations to Sheffield in the south, although it would “explore opportunities for colleagues to remain with the business.”
Burnley Council leader Afrasiab Anwar said that the shutdown would be “devastating for our town,” particularly in terms of the “distress it will cause for the hardworking employees and families who will be directly affected.”
“This announcement has caused understandable concern and uncertainty across our community,” Anwar said. “The Burnley distribution center has played a large role in our local economy for many years, and its closure will have a significant impact on many households and businesses.”
“As a council, we are engaging urgently with the company, government and other partners to seek clarity and ensure every possible support is provided to those affected,” he added. “Our priority now is to stand with those impacted, work together with partners, and ensure Burnley continues to build a strong future.”
PrettyLittleThing was involved in a minor imbroglio earlier in January after Frasers Group, the then-Boohoo Group’s biggest shareholder, accused the label’s co-founder and CEO, Umar Kamani, of receiving 2 million pounds ($2.7 million) in annual “consultancy services” from Boohoo co-founder and executive vice-chair Mahmud Kamani—his father.
“Despite repeated requests from Frasers that the details of this consultancy arrangement be disclosed and notwithstanding the significance of the alleged amounts and apparent conflict of interest concerns, including in relation to Umar Kamani’s position as a related party to Boohoo and PLT, no details have been provided to Boohoo shareholders,” Frasers Group said in a statement. “Frasers is aware that other shareholders of boohoo have previously asked Boohoo questions relating to Umar Kamani’s position at PLT and no responses from Boohoo have been forthcoming.”
