Second proxy adviser backs Boohoo over Mike Ashley’s board ambitions
- Over the past five years, Boohoo shares have fallen by almost 90%
- Frasers has accused Boohoo’s current management of incompetence
Another proxy consultancy has spoken out against Frasers Group’s bid to elect Mike Ashley and his colleague Mike Lennon to Boohoo’s board.
Glass Lewis has followed Institutional Shareholder Services in calling on Boohoo’s investors to vote against the pair’s appointment at its December 20 general meeting.
Frasers believes that selecting Ashley and Lennon would provide the leadership needed to revive the fortunes of Boohoo, which has seen its shares plummet by almost 90 percent over the past five years amid declining sales.
It has accused the group’s current management of incompetence and presiding over ‘large-scale value destruction’, with Frasers previously calling for Ashley to be appointed CEO of Boohoo.
But in a major criticism, Boohoo named Debenhams boss Dan Finley as replacement for John Lyttle, who stepped down as CEO in October after five tumultuous years in charge.
Not supported: Proxy consultancy Glass Lewis has spoken out against Frasers Group’s plans to appoint Mike Ashley (pictured) as CEO of Boohoo
Glass Lewis said Boohoo shareholders ‘would not be well served by supporting the appointment of the dissident nominees (Mike Ashley and Mike Lennon) at this time.’
It warned that placing a director on the board with “significant historical links” to Frasers and without the necessary measures to alleviate potential conflicts of interest “could cause further investor concerns.”
This echoes a similar point made by ISS on Monday, which said Ashley and Lennon had “genuine conflicts of interest.”
Glass Lewis also said that Frasers’ failure to make the required board commitments “could indicate that their intentions are not fully aligned with the interests of the company’s broader shareholder base.”
Finley said: “I am encouraged by the support of Glass Lewis, which highlights the crucial importance of protecting Boohoo’s independence and ensuring decisions are made in the best interests of all shareholders.
“With the support of our independent board, led by Tim, my priority is to drive Boohoo forward as a disruptive and market-leading company.”
Boohoo, which owns Burton, Dorothy Perkins and PrettyLittleThing, achieved significant growth during the early part of the Covid-19 pandemic, when tough restrictions on physical stores encouraged Brits to buy their clothes online.
Trading then slowed significantly after restrictions were eased and shoppers returned to buying clothes in stores.
Sales subsequently fell as inflationary pressures worsened and competition from rivals such as Chinese retailers Shein and Temu intensified.
For the financial year ending in February, Boohoo’s revenues fell by more than £300m to £1.5bn, while pre-tax losses rose by around three-quarters to £159.9m.
Boohoo Group shares were 0.35 percent higher at 34.6p on Thursday morning Frasers Group shares were 0.2 percent lower at 623p.
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