Jul 23, 2018
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Blow denies Debenhams rift despite seeking buyer

Jul 23, 2018

Press reports that Debenhams faces a virtual vote of no-confidence as a beauty service that it only recently touted as one of its big new attractions seeks an exit strategy and a new investor have been denied by both firms.

Blow said it remains committed to its Debenhams deal

The retail giant took a minority stake in on-demand app-based service Blow last autumn. Blow offers hair and beauty services in customers’ homes but also has three Debenhams concessions, and as recently as April several more were planned.

But stories that the relationship has been in trouble since then have been denied with Debenhams and Blow issuing a joint statement saying there’s still "a strong partnership" between the two.

Debenhams’ CEO Sergio Bucher had said in the spring that the link-up was the “first stage of our plan to deliver a differentiated and disruptive proposition.”

But the Sunday Times reported that after a series of Debenhams profit warnings, Blow “has refused to commit to any new spending with the department store and its backers have hired a boutique investment bank to find a buyer.”

However, it seems that while a buyer is being sought, the Debenhams expansion plan is still on track.

So who would buy the company? The newspaper quoted one unnamed potential bider saying that Blow will be in heavy demand and its database, with information on 150,000 clients, is a “gold mine”.

The firm is still at a very early stage in its development but is estimated to have a value of around £50 million with the report also saying it has drawn interest from Coty, Estée Lauder, Unilever and retailer Boots. Debenhams currently holds a 20% stake in the business for which it paid £7.5 million so any sale at the estimated figure would certainly see it more than recouping its investment.

But would not holding a stake in it also be a major blow for Debenhams? It has been seeking to update and upgrade its offer across both beauty and fashion, but with beauty being a key target category given its massive growth potential.

Clearly the retailer can still expand within beauty without owning or part-owning the businesses that operate within its stores as it works to tap into new kinds of beauty products and services to differentiate its offer from its rivals.

But owned labels had seemed to be a key part of its strategy and its overall upgrade approach for fashion has seen it boosting own-brands, dropping some long-serving Designers at Debenhams labels in favour of newer names with more Millennial appeal such as Preen and Richard Quinn.

However, with a Magasin du Nord sale also being worked on, Debenhams doesn't appear to be in a position to call the shots. With Blow being very much a key part of a new retail trend and the Debenhams stake being a minority one, it's perhaps no surprise that a change of ownership is on the cards.

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