Frasers Group has urged Boohoo shareholders to consider Mike Ashley for CEO.
- Leadership instability prompts Frasers’ call for a general meeting of shareholders.
- Frasers, Boohoo’s largest shareholder, highlights leadership mismanagement.
- Boohoo’s declining financial performance raises concern among stakeholders.
- Frasers proposes new board appointments to steer Boohoo’s future.
Frasers Group, the significant shareholder in Boohoo with a 27% stake, is urging a transformation in Boohoo’s leadership structure by appointing Mike Ashley as its Chief Executive Officer. The company cites a “leadership crisis” as the underlying cause of declining shareholder value and calls for a general meeting of Boohoo’s shareholders to deliberate on the appointments of Mike Ashley and Mike Lennon to key directorial positions.
Frasers strongly criticizes Boohoo’s current management, describing a six-month trading decline with revenues falling by 36.5%. This trend is expected to continue, with a drop in gross profit anticipated for the sixth consecutive period. The need for immediate strategic intervention is emphasised by Frasers, pointing to mismanagement as the culprit behind the erosion of a planned £125 million in cost savings and failure in market performance.
The financial missteps are further underscored by Frasers’ concerns about Boohoo’s debt refinancing strategy, particularly the £222 million facility, which is viewed as a strategic error threatening imminent corporate restructuring to meet upcoming repayments. Frasers expresses that Boohoo’s existing approach to refinancing is wholly unsatisfactory and detrimental to shareholders’ interests.
In response to these alarming developments, Frasers proposes decisive governance changes. Their open letter to Boohoo’s board describes the firm’s trading performance as “abysmal” with a significant decrease in share price, approximately 30% year-to-date. They accuse Boohoo of evading critical meetings, with “delay and ignore” tactics contributing to value destruction.
Boohoo, headquartered in Manchester, acknowledges receiving the requisition for these changes. However, a formal statement from Boohoo’s board confirms that the proposals are under advisement with professional counsel. In the meantime, they request shareholders to refrain from any immediate action.
The proposed changes by Frasers Group underscore a critical juncture for Boohoo, as it seeks to realign its leadership and restore value to its shareholders.
