By Pushkala Aripaka
(Reuters) - Internet-based fashion group Boohoo (L:BOOH) has offered to buy the online businesses of women's clothing retailers Karen Millen and Coast in a move that would broaden the appeal of its fashion ranges to more mature shoppers.
Karen Millen bought some parts of Coast's business after the latter went into administration last year, before putting itself up for sale a few weeks ago as retailers in the UK crumble under pressure from online businesses and uncertainty around Brexit.
In contrast, the bid is the latest sign of Boohoo's increasing strength, with its online-only model growing rapidly.
"The Board confirms that it has made an offer to acquire the online business of renowned British brands Karen Millen and Coast, together with all associated intellectual property rights," Boohoo said in a statement.
Sky News reported late on Monday that the deal would be part of an insolvency process known as a pre-pack administration and said the sale would put hundreds of jobs at risk at the two brands' shops, concessions and franchise stores globally.
A spokeswoman for Karen Millen, founded in 1981 and currently owned by Icelandic bank Kaupthing, declined to comment. The retailer has appointed Deloitte to look at various options for the business, including a sale.
Boohoo's shares rose as much 4%.
Based in Manchester in the north of England, Boohoo has been an online success story, drawing in a generation of younger consumers who shop on their mobile phones and share fashion tips through social media.
Its cheap clothing is in stark contrast to Karen Millen and Coast which are known for higher-priced party, office and wedding wear.
"Karen Millen, in particular, would also bring a slightly older and higher price point shopper into the group fold to extend (Boohoo's) overall offer," Liberum analyst Adam Tomlinson said, adding that Boohoo could also make use of its distribution channel.
Karen Millen and Coast have a presence in nearly 60 countries through around 500 stores, franchises and concessions, as well as their online businesses. Jefferies analysts estimated Karen Millen and Coast's online sales were worth about 40-50 million pounds in 2018.
The average price of Boohoo's self-branded apparel was 13 pounds in 2017, while products from its PrettyLittleThing range retailed for an average of 16 pounds, according to Boohoo http://www.boohooplc.com/about-us/group-overview.aspx.
Boohoo has around 13 million active customer accounts globally across its existing brands and racked up more than 250 million pounds in sales in its most recent quarter to the end of May.
