Boohoo Group has announced a new fundraising initiative to tackle its mounting financial losses. The company reported significant losses in its latest financial results, and aims to raise £39.3m to stabilize its finances.
- The group has seen a dramatic pre-tax loss of £147.3m, which is a significant increase from the previous year’s loss of £36.6m.
- Despite a 15% drop in revenue to £619.8m, brands like Karen Millen and Debenhams have shown growth, with Debenhams experiencing a 31.2% increase in gross merchandise value.
- Boohoo’s new CEO, Dan Finley, underscores the potential for shareholder value creation despite current challenges.
- A conflict with major shareholder Frasers Group adds to Boohoo’s challenges, as they advocate against Frasers’ proposed resolutions.
Boohoo Group has embarked on a fundraising venture, proposing the placement of over 19 million new shares to garner strategic flexibility and value for its shareholders. This move comes as the company struggles with growing financial losses. Reporting a pre-tax loss of £147.3m for the first half of 2024, which starkly contrasts with the £36.6m loss reported in the same period in the previous year, Boohoo aims to raise approximately £39.3m. As of now, they have secured £33.3m through this fundraising effort.
The company’s revenue has dropped by 15%, amounting to £619.8m, and there has been a 10.5% fall in adjusted EBITDA to £20.8m. Additionally, the gross profit has decreased 19.2% to £314.4m. Despite these financial setbacks, some brands under Boohoo’s umbrella, such as Karen Millen and Debenhams, have reported growth. Notably, Debenhams showed a 31.2% growth in GMV pre-returns to £265.5m, highlighting areas of potential in the company’s diverse brand portfolio.
Dan Finley, the recently appointed CEO, expresses optimism, noting the company’s undervaluation and the significant opportunities he sees for shareholder value generation. According to Finley, Debenhams’ success is a beacon, with its marketplace and beauty segments experiencing more than 170% growth, onboarding over 10,000 brands, achieving their target ahead of time. He acknowledges the volatile market conditions but remains positive about future prospects, aiming to enhance value for all stakeholders.
Further complicating the company’s situation is a public dispute with Frasers Group, a significant shareholder. Boohoo has urged shareholders to vote against Frasers’ proposals in an upcoming general meeting, raising concerns about Frasers’ intentions to prioritize their interests over other shareholders. This disagreement has surfaced after Frasers’ Mike Ashley openly criticized Boohoo’s financial strategies and revealed his ambition to lead the company, escalating tensions between the entities.
Boohoo Group’s strategic fundraising and brand successes spotlight both its challenges and opportunities amidst financial struggles.
