Boohoo has secured just under £40 million in funding in an attempt to revitalise its business amidst ongoing tensions with activist shareholder, Mike Ashley's Frasers Group.
The Manchester-based online fashion retailer confirmed this morning that it had conditionally raised approximately £39.3 million through its latest funding efforts. The amount is split between £400,000 from retail investors and a further £38.9 million from institutional investor subscriptions, as reported by .
Facing challenges from rapidly growing fast-fashion players like Shein and Temu, Boohoo has seen a notable downturn in its financial performance. Recent half-year figures from the company showed a 15% drop in revenue, a decline of 10.5% in adjusted EBITDA, and an increase in net debt exceeding £100 million.
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Market analysts at Peel Hunt have opined that the additional funds will bolster Boohoo's balance sheet, and they also anticipate a potential sale and leaseback of the company's freehold assets, such as their Soho offices, to improve the group's liquidity further.
The boohoo-Frasers feud centres around disputes over corporate governance and financial strategy. Frasers has levelled accusations of "long-term mismanagement" leading to "value destruction" at Boohoo, criticising the retailer's £222 million refinancing plan.
Yet Boohoo has dismissed Frasers portrayal of the business as "inaccurate and unfair".
Adding to the executive drama, Mike Ashley's ambitions to assume the chief executive role were dashed when Boohoo recently appointed Dan Finley to the helm.
The increased financial cushion should provide Boohoo some respite as it navigates the contentious exchanges with Frasers.
Boohoo's public spat with Frasers
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Frasers has accused the online fashion firm of "long-term mismanagement" that has resulted in significant "value destruction". The group has been vocal in its critique of Boohoos £222 million refinancing initiative.
Meanwhile, Boohoo has labelled Frasers' assessments of its operations as both "inaccurate and unfair".
Attempts by Ashley to take on the chief executive mantle at Boohoo hit a snag following the retailer's decision to appoint Dan Finley to the top post.
However, on 20 December, investors will still have the opportunity to vote on the appointment of Ashley and restructuring expert Mike Lennon to the board.
In a circular to investors last week, Boohoo implored its shareholders to vote against Ashley's proposals.
The company argued that Ashley and Frasers "attempted to exert influence over the board's refinancing, business review and appointments to the board for the good of themselves alone, and are acting in their own self-interest."
Boohoo stated: "Frasers has a previous record of this type of corporate behaviour. Shareholders should question what Frasers' real intentions are, and why it seems to be trying to disrupt the Business Review. Is it solely to maximise value, or is there a hidden agenda to acquire boohoo's assets at below market value? ".