Shares in the fast fashion giant Boohoo have rallied from a record low as the company faces another pivotal moment ahead of a decisive vote this festive season. The Manchester-based conglomerate, which owns brands such as Debenhams and PrettyLittleThing, experienced a drop in its share value in July from 35p to 27p.
However, Boohoo's shares have since rebounded to their pre-slump levels amidst ongoing debates about its strategic direction and management. Despite the recovery, Boohoo's shares are still trading lower than the 41p mark they hit in January 2024, and far below the peak of 413p during the height of the Covid-19 pandemic, as reported by .
This morning's uptick occurred as a leading shareholder advisory firm, Institutional Shareholder Services (ISS), advised Boohoo investors to oppose Mike Ashley’s attempt to secure a board position at the emergency meeting scheduled for later this month. Boohoo confirmed that ISS had recommended a vote against the proposal on 20 December.
The fashion retailer is currently locked in a dispute with businessman Mike Ashley’s Frasers Group, which holds a 27% stake in Boohoo. On Sunday, Ashley penned an open letter to shareholders criticising the company for what he described as an "egotistical founder who has an unhealthy grip on the board" and claimed the company was "in desperate need of the guidance I can provide".
He also cautioned against a scenario where there is a "fire sale of assets at knockdown prices", including the Debenhams brand, which he argued should not be sold. Ashley expressed his intention to take on the role of Boohoo’s chief executive to aid the brand and "prevent any dishonest profiteering" off investors.
In retort, Boohoo maintained that Ashley was acting in pursuit of his own commercial interests, not those of its shareholders. On Monday, Boohoo articulated in a release: "ISS states that Frasers has offered a superficial view of performance and no specific plans for change and the two Frasers candidates, Mike Ashley and Mike Lennon, have real conflicts of interest, concluding that board change at Boohoo Group is not warranted."
Chairman Tim Morris endorsed the support from ISS, stating it aligns with the board's recommendation to dismiss the proposals from Frasers Group.
Shareholders are set to cast their votes on Ashley’s bid for a board position at the company before Christmas. A representative for Frasers commented: "The ISS opinion pre-dates the statements from Mr Ashley yesterday."
They added, "Mr Ashley set out clearly in his letter of 8 December his determination to work on behalf of all boohoo shareholders and support Dan Finley to deliver on the opportunities to turn around the fortunes of the group and restore shareholder value."
"He has been very clear he would not want Debenhams sold or any fire sale of assets and has put on record his commitment to transparency and shareholder consultation, something badly missing under the current board."
"To achieve this, boohoo shareholders must vote for the resolutions on 20 December."
Boohoo’s share price is on its knees
AJ Bell investment analyst Dan Coatsworth commented: "Boohoo says it is not deliberately seeking confrontation with Frasers, yet this is more than just a simple war of words."
"Its battle against the Sports Direct retailer is being played out in the public domain for all to see."
"Each week brings a new form of attack from one side or the other, the latest being Boohoo latching onto a recommendation from proxy adviser ISS to vote against Frasers’ quest to get Mike Ashley a seat on Boohoo’s board."
"Recommendations from ISS or fellow proxy adviser Glass Lewis rarely form the backbone of an announcement to the stock market, but Boohoo has seized upon ISS’s latest recommendation to launch another attack on Frasers."
"This follows comments at the weekend from Mike Ashley that Boohoo must avoid a ‘fire sale’ of assets."
"The fate of Boohoo will be in the hands of its shareholders when they vote on 20 December."
"At 35.88p, Boohoo’s share price is on its knees, trading at a fraction of the 400p+ level seen in 2020."
"Long-suffering shareholders might welcome someone of Ashley’s calibre joining the board and offering a different viewpoint to revive the business."
"Equally, some shareholders may not take kindly to his vulture-like tendencies and view a board appointment as a pre-cursor to Frasers muscling in and taking Boohoo out on the cheap."
"What’s certain is that both parties are going to be working flat out over the next 11 days to get their viewpoint across and win over Boohoo shareholders."
