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European E-Tailer Boo.com’s Bankruptcy Creates Panic

Sales & Trends

LONDON, UK (19 May 2000)–The collapse of British on-line clothing retailer Boo.com Group Ltd. could be the first of many e-tailers, reports the Associated Press. Boo.com is the first big European internet business to go bankrupt, failing just six months after the widely publicized launch of its website. The AP article also indicates that Boo.com’s […]

LONDON, UK (19 May 2000)–The collapse of British on-line clothing retailer Boo.com Group Ltd. could be the first of many e-tailers, reports the Associated Press. Boo.com is the first big European internet business to go bankrupt, failing just six months after the widely publicized launch of its website. The AP article also indicates that Boo.com’s demise comes at a time when investors already are losing some of their appetite for the once-sizzling dot-com sector. “Over 70% of all business-to-consumer internet companies will go out of business within the next couple of years. But the ones that survive will make a great deal of money,” said Michael Whitaker, chief executive of NewMedia Spark, a venture capital firm. Founded by two Swedes, Ernst Malmsten and former fashion model Kajsa Leander, the company hoped to become a global brand using its advanced website, where three-dimensional mannequins showed off the wares. Other investors involved in the project were French entrepreneur Bernard Arnault and Italy’s Benetton family for US$125 million in startup funds. Boo.com was said to be worth some $400 million at the peak of last year’s Internet investment frenzy, and it aimed to issue its first shares to the public later this year. The company was hampered by technological glitches and slack controls on spending, as well as the departures of a finance director and other key personnel. A report this week by PricewaterhouseCoopers claimed that the majority of Britain’s publicly traded Internet companies could run out of cash within 15 months. It said a quarter of them are likely to run dry within the next six months, reported the AP. David Kemp of the London brokerage Brewin Dolphin said online retailers selling intangible goods such as plane tickets and financial products stand a better chance of survival than those peddling clothes, which require proper fitting. (JW)

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