Fast-fashion giant Boohoo has bought department store chain Debenhams for $75 million — but the deal won’t save the chain’s 118 stores

© Provided by Business Insider A person wearing PPE (personal protective equipment) of a face mask as a precautionary measure against COVID-19 walks past a Debenhams department store, boarded up and closed-down due to the novel coronavirus, on Oxford Street in central London on April 27, 2020. TOLGA AKMEN via Getty

Fast-fashion giant Boohoo has bought British department store chain Debenhams for £55 million ($75 million), but all the chain’s 118 remaining high-street stores will still shut.

Boohoo has only bought Debenhams’ intellectual property and website. Up to 12,000 jobs are at risk.

Debenhams’ products will be available on Boohoo’s website from early 2022.

Making Debenhams an online-only brand aligns with the shift of fashion retail from brick-and-mortar stores to digital, which has accelerated during the pandemic.

In a presentation to investors on the acquisition, Boohoo noted that Debenhams’ online business generated around £400 million ($547 million) in revenues in the year to August 2020.

Read more: Mark Tritton is bringing his digital learnings from Target to Bed Bath & Beyond and leading the company through a major e-commerce overhaul aimed at fending off competitors like Amazon

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The purchase would also allow Boohoo to enter the beauty, sports, and homeware markets, it added.

“The acquisition of the Debenhams brand is an important development for the Group, as we seek to capture incremental growth opportunities arising from the accelerating shift to online retail,” Boohoo CEO John Lyttle told investors.

“The acquisition represents an exciting strategic opportunity to transform our target addressable market through the creation of an online marketplace that leverages Debenhams’ high brand awareness and traffic through the development of beauty and fashion partnerships connecting brands with consumers,” he added.

Debenhams announced in December it would enter liquidation after its falling sales were hit further by the pandemic.

“Given the current trading environment and the likely prolonged effects of the COVID-19 pandemic, the outlook for a restructured operation is highly uncertain,” its administrators FRP Advisory said at the time.

Debenhams isn’t the only British apparel retailer whose sales have suffered.

Topshop owner the Arcadia Group fell into administration in late November, putting more than 13,000 jobs at risk. Its CEO blamed compulsory store closures during the UK’s national lockdowns. Online fashion house ASOS is now seeking to buy the brand for more than £250 million ($342 million), Sky News reported.

Fast-fashion giant Primark said sales were down 30% year-on-year in the quarter, adding that lockdown-mandated store closures across the UK and Europe could cost it £1.05 billion ($1.43 billion) in lost sales.