Boohoo has received backing from proxy advisers in its boardroom disagreement with Frasers Group.
- Advisers Glass Lewis and ISS advise shareholders to oppose Mike Ashley’s board appointments.
- Concerns raised about potential conflicts of interest and governance issues with Frasers Group.
- Boohoo’s performance struggles amid competition from fast-fashion brands Shein and Temu.
- Frasers Group’s declining sales and profit outlook could affect its bid for control.
Boohoo has been supported by proxy advisers Glass Lewis and ISS in urging its shareholders to vote against the proposed board appointments by Frasers Group, set for discussion at the upcoming general meeting on 20 December. This advice was formalised on 12 December, underscoring Boohoo’s strategic stance against the resolutions put forth by Frasers.
Glass Lewis raised significant concerns about potential conflicts of interest that could arise should Mike Ashley be appointed to Boohoo’s board, stating that this move could potentially undermine shareholder interests without adequate governance structures in place. The advisor further questioned Frasers Group’s intentions, given their refusal to address these issues directly.
Tim Morris, the chairman of Boohoo Group, formally welcomed Glass Lewis’s recommendation, emphasising the necessity of protecting Boohoo’s independence and aligning board decisions with the best interests of all shareholders. This aligns with CEO Dan Finley’s commitment to maintaining strategic focus and enhancing shareholder value during the company’s ongoing business review.
Boohoo has faced formidable challenges in maintaining its market position due to intensifying competition from fast-fashion giants like Shein and Temu, which sell extremely low-priced apparel globally. Recent financial disclosures highlight a 15% drop in revenue and a 10.5% decrease in adjusted operating profit, with a significant increase in net debt exceeding £100 million.
Simultaneously, Frasers Group, which is attempting to exert control over Boohoo, has been experiencing its own setbacks. Recently, Frasers adjusted its profit expectations for the year downwards to between £550 million and £600 million, exacerbated by a 33% decrease in pre-tax profit to £207.2 million and an 8% drop in sales during the first half of the year.
The backing of Boohoo by proxy advisers highlights the complexities in managing shareholder interests amid industry challenges.
