British online fashion company boohoo has responded to Frasers Group’s proposal to appoint its founder Mike Ashley as new chief executive of the online retailer.
Frasers, which owns 27% of boohoo, issued notices to boohoo’s board calling for an extraordinary general meeting of shareholders to vote to install Ashley to replace current CEO John Lyttle.
On 18 October 2024, boohoo revealed Lyttle’s decision to leave the company after five years as the company launched a strategic review of options for each division. On the same day, the company also announced the signing of a new £222m debt financing agreement.
Frasers' letter to boohoo's board was sharply critical, suggesting that the board has lost its ability to manage effectively and slamming boohoo's debt refinancing strategy.
Responding to the letter on Friday 25 October, a statement from boohoo described the criticisms as "inaccurate and unfair".
The online retailer defended the refinancing deal as beneficial for the company's future and highlighted previous discussions with Frasers on the matter.
The company also raised concerns about Frasers' significant stake in competitor ASOS, which operates in similar markets to boohoo.
boohoo has experienced a significant drop in share price following a sales boost during the Covid-19 lockdowns.
The company is currently valued at £395m and has recently cut 1,000 jobs due to escalating losses amounting to £160m.
In May 2024, the online retailer reported that its statutory pre-tax loss grew by 69.2% to £159.9m ($199.7m) in the fiscal year 2024, from the previous year’s loss of £90.7m.
Despite these challenges, boohoo insists that the process of appointing a new CEO is underway and requires careful consideration.
Frasers, which also owns House of Fraser and Evans Cycles, suggested there was "no stronger candidate" than Ashley for boohoo's CEO role.
However, Boohoo emphasised the need for proper governance in such a critical decision.
The company expressed openness to discussing a director appointment with Frasers but sought assurances of "appropriate governance" practices.
Following boohoo's response, its shares saw a 3% increase on Friday 25 October.
