Retail conglomerate Frasers Group seeks to gain influence over Boohoo, intensifying boardroom tensions.
- Frasers, owning 27% of Boohoo, calls for Mahmud Kamani’s ousting and Mike Ashley’s rise as chair.
- Frasers criticises Boohoo’s management for lack of transparency and declining financial performance.
- Boohoo disputes Frasers’ claims, defending recent debt restructuring and leadership changes.
- Shareholders to vote on Frasers’ proposals amidst ongoing legal and corporate disputes.
The escalating boardroom conflict between Frasers Group and Boohoo has captured significant attention within the retail sector. Frasers, a major stakeholder in Boohoo, is pushing for substantial changes at the top, advocating for the removal of founder Mahmud Kamani from his leadership role to install Mike Ashley as chair. Alongside this, they propose restructuring expert Mike Lennon for the directorship. Frasers’ dissatisfaction stems from Boohoo’s recent financial struggles, including a dramatic increase in pre-tax losses and falling sales.
Frasers Group, a major shareholder with 27% stake, argues that Boohoo’s current leadership has led to “dismal results” and “lack of transparency”. They characterise Boohoo’s recent £222m refinancing deal as “unsatisfactory”. Boohoo’s pre-tax losses soared from £36.6m to £147.3m within six months, sparking concerns among investors regarding the company’s financial health.
In a move to consolidate influence, Frasers aims to replace outgoing CEO John Lyttle with Ashley, perceiving his appointment as a solution to Boohoo’s leadership crisis. However, Boohoo appointed Dan Finley, a decision dismissed by Frasers as “desperate”. The retailer’s board has repositioned Kamani to vice-chairman, appointing Tim Morris as an interim chair to maintain operational independence while keeping Kamani’s executive involvement intact.
Amidst the corporate wrangle, allegations of stalking and corporate espionage have emerged, escalating tensions further. Frasers’ attempts to influence decision-making are also complicated by its interests in Asos, a factor Boohoo highlights to caution shareholders. The potential for a Boohoo and Asos merger is speculated upon by industry analysts, which complicates the landscape further.
As the shareholders’ meeting approaches, the outcome of voting on Frasers’ proposals remains uncertain. Industry observers like Paul Meechan predict shareholders’ reluctance to back Ashley, considering the lack of a clear advantage and potential conflicts of interest. Frasers’ strategy under scrutiny involves aggressive retail expansion and flagship store models, which some view as counterproductive.
Ashley’s previous acquisitions, like House of Fraser, demonstrate a pattern of acquiring businesses for restructuring or asset sales, raising questions about Boohoo’s future if he gains control. The upcoming shareholder meeting will determine whether Boohoo embarks on a new strategy under Ashley’s leadership or continues its current direction.
The ongoing battle for control of Boohoo between Frasers Group and its existing leadership is at a crucial juncture as the shareholder vote looms.
