Frasers Group, led by Mike Ashley, is urging for a restructuring in Boohoo’s leadership due to notable management issues.
- Frasers Group, holding a significant stake in Boohoo, has requested a shareholder meeting to propose Mike Ashley as CEO.
- The proposal follows claims of “long-term mismanagement” leading to significant “value destruction” at Boohoo.
- Frasers highlights Boohoo’s declining performance, including a 36.5% drop in revenue over a recent six-month period.
- The response from Boohoo involves reviewing the legitimacy of the leadership change requisitions with advisors.
Frasers Group, under the ownership of Mike Ashley, is spearheading a campaign to overhaul the leadership of Boohoo, a prominent fast fashion brand. The retail giant, which owns roughly 27% of Boohoo, is calling for an urgent general meeting of shareholders to consider the appointment of Mike Ashley as CEO. This move comes amidst claims of “long-term mismanagement” within Boohoo that is blamed for considerable “value destruction.”
The proposal was delivered in the form of a letter to Boohoo’s board, identifying a ‘leadership crisis’ that necessitates immediate action. Frasers believes that appointing Mike Ashley and Mike Lennon as key directors is the only viable path to rectifying Boohoo’s trajectory. The group has been vocally critical of Boohoo’s ‘abysmal trading performance and share price collapse,’ citing a revenue drop of 36.5% for the period ending August 2024. Frasers is concerned that gross profit will follow this downturn when full results are disclosed in the coming November.
Further criticism from Frasers addressed Boohoo’s cost savings measures, announced in October 2023, which have reportedly been undermined by poor market execution. They condemned Boohoo’s debt refinancing strategy, labeling it as a ‘backward move’ that poses an ‘appalling outcome for shareholders.’ The emphasis was on the £222 million refinancing as a severe misstep, potentially leading to drastic corporate measures to settle debts due imminently.
Moreover, Frasers criticized Boohoo’s management for ignoring repeated meeting requests and employing ‘delay and ignore’ tactics. They urged transparency and immediate action, pointing at Boohoo’s nearly 30% share price drop year-to-date as evidence of ongoing failure.
Boohoo’s initial response to Frasers’ announcement was to receive the proposal formally but recommended shareholders take no action. The company is engaging with advisors to assess the requisition’s validity before making a further statement.
The situation remains tense as Boohoo considers Frasers Group’s demands for leadership changes amidst falling performance metrics.
