Frasers Group is pushing for its chief, Mike Ashley, to be appointed as the CEO of fast fashion label Boohoo, citing "long-term mismanagement" that has resulted in "value destruction".
The company, owned by Mike Ashley, penned a letter to Boohoo's board this morning, highlighting a "leadership crisis" within the group, as reported by .
In a statement to the markets today, Frasers, which is Boohoo's largest shareholder with approximately 27 per cent ownership, expressed its commitment to "committed to maximising value" for shareholders.
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The company stated: "Requisitioning a general meeting of Boohoo to appoint Mr Mike Ashley as a director and CEO of Boohoo and Mr Mike Lennon as a director of Boohoo, to take effect without delay."
"Frasers firmly believes that these appointments are in the best interests of Boohoo, its shareholders and its stakeholders."
"The board appointments proposed by Frasers are now the only way to set a new course for Boohoo's future. Frasers urges Boohoo shareholders to vote in favour of its proposals."
Alongside this, an open letter was sent to Boohoo's board, lamenting the "abysmal trading performance and share price collapse," and noting that "the six-month trading period ended 31 August 2021, the company's revenue for the six-month trading period ending 31 August 2024 is down 36.5 per cent."
It said: "We expect that gross profit will follow the declining trend of revenue, and when Boohoo announces its half-year results in full in November, gross profit will be down for the 6th consecutive reporting period."
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Frasers has also expressed strong criticism towards Boohoo over what it describes as "the impending £125m of cost savings that were first announced to the market in October 2023", stating they "appear to have been eroded by abysmal go-to-market performance."
Furthermore, Frasers has made a pointed accusation against the management, asserting: "has lost its ability to manage Boohoo's business and investments". It goes on to caution that Boohoo's approach to "debt refinancing are wholly unsatisfactory", condemning it as "a backwards [move] for the company and an appalling outcome for shareholders."
The firm highlighted the £222m debt refinancing facility as a serious strategic error, claiming unequivocally that it "almost unquestionably leaves the company in a position of needing to undertake drastic corporate actions..in order to repay the term loan due in 10 months."
Frasers' statement further laments what it perceives as "long-term mismanagement" resulting in a steep decline in Boohoo's share price, which has fallen nearly 30 per cent year to date and 17 per cent over the past three months alone.
They also accused Boohoo of repeatedly ignoring requests for meetings, saying: "We recognise stone-walling when we see it, and these tactics of 'delay and ignore' are no longer tolerable in the context of the continued value destruction that the board is overseeing at Boohoo."
It is understood the Boohoo board will meet today.
Boohoo responded to the Frasers announcement and letter with a formal receipt to the markets.
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It acknowledged: "The requisitions propose to appoint Mike Ashley and Mike Lennon as directors of the company and to remove John Lyttle as a director of the company. They also propose to appoint Mike Ashley as chief executive officer, should he be appointed as a director."
"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."
"In the meantime, shareholders are urged to take no action."
Russ Mould, Investment Director at AJ Bell, commented: "After a period out of the spotlight it looks like Mike Ashley could be returning to the frontline of retail as Frasers uses its stake in Boohoo to call for a vote on him being appointed as its new CEO."
"Ashley has left the day-to-day running of Frasers to his son-in-law Michael Murray since 2022 but today's news suggest he is itching to get back to the coalface and, if his bid to lead Boohoo is successful, it's unlikely to be a quiet tenure."
"Boohoo is vulnerable amid the news CEO John Lyttle is set to step down and the ongoing strategic review which could see the business broken up. Given the mess Boohoo has got itself into it could take all of Ashley's nous and experience to turn things around."