Boohoo Group faces financial challenges with increased losses, prompting strategic fundraising efforts.
- The company has completed a fundraising round of £39.3 million amidst deepening pre-tax losses reported at £147.3 million.
- Revenue has decreased by 15% to £619.8 million, and adjusted EBITDA dropped by 10.5% to £20.8 million.
- While some brands like Karen Millen and Debenhams show growth, the overall performance remains a concern.
- A conflict with major shareholder Frasers Group adds to the complexity of Boohoo’s current situation.
Boohoo Group has undertaken a strategic fundraising initiative, successfully raising £39.3 million through the placement of 19,354,838 new ordinary shares. This move aims to provide the company with additional strategic flexibility as it navigates a period of increasing financial loss. The interim results have shown a significant pre-tax loss of £147.3 million, compared to £36.6 million in the same period the previous year, highlighting the growing financial pressures the company faces.
The company’s revenue has decreased by 15%, amounting to £619.8 million. Alongside this, adjusted EBITDA has seen a decline of 10.5%, reaching £20.8 million, while gross profit fell by 19.2% to £314.4 million. Despite these figures, some of their brands, particularly Karen Millen and Debenhams, show promising signs. Karen Millen’s GMV pre-returns increased by 2.3% to £78.3 million, while Debenhams experienced a remarkable GMV growth of 31.2% to £265.5 million. The group’s newly appointed CEO, Dan Finley, remains optimistic about these specific areas.
Dan Finley has expressed confidence in the potential of Boohoo’s core brands to create substantial value for shareholders, despite the turbulent market conditions. He noted significant growth in Debenhams’ marketplace and beauty sector, with a year-on-year GMV growth exceeding 170%, backed by the onboarding of approximately 10,000 brands. Finley acknowledges the challenges but remains focused on leveraging opportunities to enhance shareholder value.
Complicating Boohoo’s situation is an ongoing dispute with Frasers Group, a major shareholder, which has proposed resolutions that Boohoo’s board advises against. The company’s circular to shareholders has accused Frasers of prioritising its own interests over those of Boohoo’s broader shareholder base. This tension is exacerbated by public criticisms from Mike Ashley of Frasers Group, reflecting a contentious relationship that could impact future governance.
Boohoo Group’s financial trajectory is marked by both significant challenges and strategic opportunities, with stakeholder relations playing a pivotal role.
