Does Culture Matter In Fashion M&A?
Boohoo buys but tears more likely at Sports Direct…
There were two big UK fashion acquisitions this week: first, Sports Direct bought Jack Wills (taking-on its stores and 1,700 employees), and then Boohoo Group PLC purchased the IP and online business of Karen Millen and Coast. Both were rescue deals — the similarities end there.
From a customer perspective it is possible to plot a path from Boohoo to the slightly higher-priced Coast and then Karen Millen. Operationally, Boohoo is an eCommerce expert and thus well-placed to optimise online sales and offer a better delivery and returns proposition. The brands feel culturally close, with synergies of purpose and areas where one can enhance the other.
Conversely, preppy Jack Wills is a world-away from cut-price Sports Direct. Their respective customers do not feel related — or relatable — to each other and there is no obvious synergy between bargain-basement sports apparel and pop-collared polos.
It will be fascinating to see what owner Mike Ashley has in store for Jack Wills (literally and metaphorically), but it is easy to foresee an acrimonious relationship akin to The House Of Fraser, another recent addition to his empire.
Buyers should assess if they can improve a target’s brand or underlying customer proposition, if they cannot, then maybe they should shop elsewhere…
