Online fashion group boohoo has responed to a letter issued by Frasers Group in which it pushes the business to make Frasers’ founder Mike Ashley CEO, amidst a “leadership crisis.”
While the Board of boohoo is in the process of reviewing the requisitions with its advisers, it has spoken out to give clarification on certain matters raised by Frasers.
boohoo says it has neither delayed responding to Frasers’ requests for Board representation or ignored them, adding: “Frasers’ wish for Mike Ashley to be appointed as a Director and Chief Executive Officer was first communicated by Frasers to boohoo at an in-person meeting on the evening of Friday 18 October 2024, when Frasers sought to establish a 48-hour deadline for the Board to confirm that it would proceed to make this appointment.
“This was the first occasion on which Frasers had identified its preferred Board candidate and followed Frasers having formally ruled out Mr Ashley for the role on 9 October 2024 and having previously and consistently indicated that its one nominee would perform a non-executive role.”
With Ashley a 73% shareholder in Frasers, Frasers owning a 23.6% stake in ASOS, and both Frasers and ASOS operating in similar markets to boohoo, boohoo noted that “these are important facts that need to be taken into account and carefully considered by the Board.”
Boohoo continued: “Whilst the Board remains willing to discuss Board representation with Frasers in a constructive manner, it has been clear with Frasers that before any appointment can be made, appropriate governance will be required to protect the Company’s commercial position and the interests of other shareholders. boohoo has sought assurances from Frasers in this regard and they have not to date been provided.”
Boohoo also commented on Frasers’ critique of its recent debt refinancing, saying it is “inaccurate and unfair.” Boohoo said: “The refinancing provides certainty for the Company around its future requirements and is supported by its existing group of high street banks.
“The Company’s approach to its recent debt refinancing was discussed on numerous occasions with Frasers and its advisers. As part of those discussions Frasers were advised that the Board would be pleased to consider any alternative proposals they might wish to present, but none were forthcoming.”
Shirebrook-based Frasers Group, the largest shareholder in boohoo, with 27% of the issued share capital, is calling for a meeting of shareholders to vote on appointing Mike Ashley as a director and CEO, as well as Mike Lennon, a restructuring expert, as a director.
It comes after boohoo announced that John Lyttle would be stepping down as CEO, following five years with the Group, and amidst declining revenue.
In its letter, Frasers critiqued the business’s Board, saying it has lost its ability to manage boohoo’s business and investments.
