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Frasers Group has called on Boohoo to appoint its founder Mike Ashley as director and CEO of the struggling online company, after slamming the “continued incompetence” of the current Boohoo board amid an “abysmal” trading performance. In an open letter to Boohoo, Frasers urged the company to remove outgoing CEO John Lyttle as director and appoint Ashley as chief “without delay”, adding that his appointment would be in the “best interests of the company, its shareholders and its stakeholders”.
It also called on Boohoo to appoint restructuring expert Mike Lennon as a director, as he has “significant experience” in retail assignments and is “ideally positioned to support the execution of a new strategy”.
It comes as Frasers warned Boohoo that its board has “lost its ability to manage Boohoo’s business and investments”.
“The board appointments proposed by Frasers are now the only way to set a new course for Boohoo’s future,” the letter said.
Ashley’s Frasers Group is currently the largest shareholder of Boohoo, owning a 27% stake in the company.
In its letter to Boohoo, Frasers classed Boohoo’s trading performance as “abysmal”, after its revenues fell 15% to £620m for the six months ended 31 August 2024.
It said it expects gross profit will follow this declining trend, and when Boohoo announces its half-year results in full in November, gross profit will be down for the sixth consecutive reporting period.
Boohoo confirmed it had received the letter, and said: “The Boohoo board is in the process of reviewing the content and validity of the requisitions with its advisers. A further announcement will be made in due course.”
Last week Boohoo announced that its CEO John Lyttle would step down after five years in the role. At the same time, Boohoo said it had secured a £222m debt refinancing agreement to support its “next phase of development”.
However, in its open letter, Frasers called the terms of the debt refinancing “wholly unsatisfactory”.
It said: “Frasers considers the refinancing to be a step backward for the company and an appalling outcome for shareholders. The new £222m facility is severely short dated, seemingly more expensive than the previous financing arrangement and almost unquestionably leaves the company in a position of needing to undertake drastic corporate actions (whether it be disposals, deeper operational cuts, closures etc.) in order to repay the term loan due in 10 months.”
It added: “Had Boohoo engaged constructively with Frasers on the refinancing, alternative solutions could have been fully explored which may have resulted in a more favourable outcome for all stakeholders.”
Frasers concluded: “For too long, this board has ignored the views of shareholders and refused to meaningfully engage with their ideas. But no longer. We are requisitioning a shareholder meeting to provide a referendum on the large-scale value destruction and long-term and continued incompetence of the current board and to provide a solution to boohoo’s leadership crisis. We are confident that we are not alone in these views and that shareholders will vote for the governance change that boohoo so badly needs.”
