Wealthy Mike Ashley’s Frasers Group has called for him to be appointed as the new CEO of Boohoo, in which the Frasers hold a 27% stake, following concerns about a “leadership crisis” at the fast fashion retailer.
In an open letter, Frasers urged Boohoo to replace current CEO John Lyttle, who recently announced his intention to step down, with Ashley to deal with the company’s declining performance.
Frasers Group cited Boohoo’s poor trading results and falling share price as key reasons for the proposed leadership change. Boohoo’s revenue for the six-month period ending August 2024 fell 36.5%, and overall profit is expected to decline for the sixth consecutive reporting period. The book criticized Boohoo’s board for overseeing a long-term decline in prices, which have fallen 29% year to date and 17% in the past three months.
Frasers Group, an FTSE 100 company, has expressed frustration over what it described as Boohoo’s failure to deal properly with its board renewal requirements, accusing the retailer of using “delayed and apathetic” tactics in efforts to meet with executive chairman Mahmud Kamani.
A review of strategy and the upcoming battle
Last week, Boohoo announced a strategic review to explore options to unlock shareholder value, including a possible breakup of the company and the sale of brands such as PrettyLittleThing, Dorothy Perkins, and Warehouse. The move has set the stage for a potential clash between long-time rivals Ashley and Kamani, particularly as Frasers Group continues to increase its stake in Boohoo from June 2023.
Frasers Group believes that appointing Ashley as CEO is the “best solution” to resolve the leadership issues and stop the destruction of the company’s value. Boohoo, however, is reviewing the request with its advisors and has indicated that further announcements will be made at a later date.
As the rift between Ashley and Kamani heats up, this board battle could shape the future of Boohoo as it faces major financial challenges.
