Boohoo has accused Frasers Group of attempting to destabilize and disrupt the company in an ongoing boardroom conflict.
- A letter from Boohoo to shareholders claims Frasers is acting solely in its own commercial self-interest.
- This is compared to a previous situation where Frasers exerted pressure on Studio Retail Group’s management.
- Proxy adviser ISS has advised shareholders to reject Mike Ashley’s proposals for board seats.
- Shareholders are set to vote on December 20 regarding the appointment of Ashley and Mike Lennon.
Boohoo has recently issued a strong warning to its shareholders, accusing Frasers Group of engaging in a campaign to destabilize and disrupt Boohoo’s operations. The claims center around Frasers’ alleged efforts to push Mike Ashley and senior Frasers executives onto Boohoo’s board. Boohoo asserts that these actions cater solely to Frasers’ commercial interests rather than benefitting all shareholders.
Boohoo’s letter to its investors highlights previous tactics employed by Frasers at Studio Retail Group, where the latter leveraged its shareholding to influence the board significantly. These historic actions included an attempt by Mike Ashley to be made chairman and another to install Benjamin Gardener on the board, ultimately contributing to the company’s administration.
The communication from Boohoo further refers to a recommendation from ISS, a proxy adviser group, which has urged stakeholders to dismiss Ashley’s attempts to secure board seats. The tension in Boohoo’s leadership started to escalate after the unexpected resignation of CEO John Lyttle in October. Following this, Frasers, holding a 28% stake, sought to place Ashley in the CEO role, a proposal that was not entertained as Dan Finley, formerly of Debenhams, was chosen instead.
Amidst these developments, shareholders will have an opportunity to cast their votes on December 20 on whether Ashley and restructuring expert Mike Lennon will join the board. Ashley contends that his board participation would bring fresh insights and accountability, elements he believes Boohoo is currently lacking. He is also against the cheap sale of Debenhams and affirms his commitment to the company’s stability, hoping to prevent any ‘fire sale’ actions.
In his open letter, Ashley lambasted the current board, describing its defenses as weak and self-serving, purposed to maintain an unhealthy status quo. He pledges his intent to anchor Boohoo more firmly, especially as overseas competitors continue to perform robustly in the UK fast-fashion sector.
The upcoming shareholder vote will be pivotal in determining the future of Boohoo’s leadership amidst its ongoing boardroom battle with Frasers.
