British online retailer Boo.com ran out of cash yesterday and will be liquidated by court-appointed KPMG Corporate Recovery in London.
Started last year as a multinational online venture for selling apparel, footwear and accessories, boo could accept orders from 18 countries and seven languages in Europe and North America — when it got them. But according to media reports, the company is losing $1 million a week.
Still, KPMG sees value for retailers in boo’s debris, particularly in its fulfillment infrastructure and remaining talent pool.
“It’s actually a very sophisticated fulfillment system on which you could bolt numerous retailers,” said Mick McLoughlin, partner at KPMG Corporate Recovery. “So you could have 10 to 20 different Web sites all feeding into the infrastructure that boo built up for fulfillment.”
Around 40 companies have expressed interest in buying some or all of boo, McLoughlin said.. He would not mention names, but said that haste was critical.
“Because of the time-scales involved, because anybody buying it needs to employ the bright people they’ve got here, we’ve said we want to do this deal very quickly,” McLoughlin said, adding that KPMG will consider only companies that furnish a $1.6 million refundable deposit as a sign of serious intent.
But potential bidders might find little else besides infrastructure. About 220 boo executives out of a total of 250 in Britain were laid off yesterday, McLoughlin said.
The fate of another 70 executives in the U. S. office again is uncertain. Calls to the New York office were not answered.
Boo was founded last year by three Swedish entrepreneurs, Ernst Malmsten, model Kajsa Leander and Patrik Hedelin. The site went live in November, hindered by technical problems, overstaffing, job cuts, financial overspending, late deliveries of products and high-profile defections of senior executives.
Most recently boo needed $30 million to tide over a financial crisis. But major investors like French luxury group LVMH, Italian apparel marketer Benetton and U. S. investment bank J. P. Morgan & Co. balked and decided to pull the plug.
“They basically had a very ambitious investment program,” McLoughlin said. “They put together a very sophisticated infrastructure and the sales did not take off quickly enough to start generating cash to supplement the cash that the shareholders were putting in.”
Indeed, in its short life, boo ran through all but $500,000 of the $135 million invested in the online retailer. In return, sales for the first four months through February totaled only $1.34 million, according to reports.
Many sportswear and fashion brands, especially European, will be hit hard by boo’s failure. It is not known how much the online retailer owes its creditors. Among the brands boo sold are DKNY, Fred Perry, JanSport, Jil Sander, Moschino, Patagonia, Puma, Seiko, Timberland and The North Face.
Boo’s failure is bound to set alarm bells ringing not just in Europe but also in the U. S., where many online retail stocks — from big names like Amazon.com to smaller shops like Value America –are down 30 percent to 95 percent from their 52-week highs.
“The next two quarters, you’re going to see the vast majority of online retailers actually going out of business,” Tom Wyman, San Francisco-based analyst at J. P. Morgan & Co., said last month. “By Christmastime, most of these retailers that aren’t in a leadership position are gone because they have run out of cash and they can’t get refinanced.”
