Mike Ashley has requested to be made CEO at Boohoo, citing leadership issues.
- Frasers Group, controlled by Ashley, seeks urgent changes in Boohoo’s management.
- Boohoo’s outgoing CEO and financial struggles underline the call for leadership revision.
- Frasers criticises Boohoo’s recent debt agreement as damaging to shareholder value.
- Ashley asserts Frasers’ attempts at dialogue with Boohoo have failed, prompting direct action.
Mike Ashley, the owner of a significant 27% stake in Boohoo, has formally requested to be appointed as the company’s Chief Executive Officer. He addressed this demand through an open letter to Boohoo’s board, highlighting a leadership crisis within the fashion retailer. The Frasers Group, directed by Ashley, has also sought a general meeting to propose both Ashley and Mike Lennon, managing director at Kroll Advisory, as directors at Boohoo.
Following the announcement of CEO John Lyttle’s impending departure after a five-year term, Frasers articulated its view that immediate leadership restructuring is essential. The company claims to have repeatedly proposed bringing in an ‘experienced individual’ to the Boohoo board, anticipating Lyttle’s resignation.
Despite ongoing communications, Frasers alleges it has received only interim responses, suggesting the board’s reluctance to promptly address the leadership recommendations. The group believes this delay exacerbates Boohoo’s struggles, including a notable drop in sales by 36.5% over three years and a significant decrease in share value by around 29% this year alone.
In financial terms, Boohoo secured a £222 million debt refinancing deal, intended to aid its development phase. However, Frasers Group criticised the refinancing terms as inadequate, viewing them as a regression and detrimental to shareholder interests. The new debt facility’s short-term nature and higher costs, it is claimed, compel drastic actions like potential disposals or operational cuts to meet upcoming repayment deadlines.
Frasers suggests that a more favourable refinancing deal could have been negotiated, had there been constructive engagement with Boohoo. With the online retailer contemplating business restructuring to enhance shareholder value, Frasers insists on being consulted before any significant disposals occur.
Frasers Group remains adamant on discussing leadership and strategic changes at Boohoo to mitigate ongoing challenges.
