Boohoo clears the way for a split after its boss resigns
- John Lyttle announced he will step down after five years running Boohoo
- Analysts say the collapse of the empire is looming
- The business community exploded in popularity thanks to its appeal to trendy young shoppers
Boohoo fired the ‘starting gun’ for the break-up of the company when the boss resigned.
The online fashion group announced a review casting doubt on the future of its Karen Millen and Debenhams brands, which could be spun off or sold in a bid to boost its falling share price.
CEO John Lyttle announced he will step down after five years leading Boohoo, whose brands also include Oasis, Coast, Warehouse, Nasty Gal and Pretty Little Thing.
Analysts said a collapse of the empire was looming.
The company was founded in Manchester in 2006 by Mahmud Kamani, 60, and Carol Kane, 58, and exploded in popularity thanks to its appeal to trendy young shoppers. When its shares peaked in July 2020 during Covid-19 lockdowns, Boohoo was valued at more than £5 billion.
But the stock has fallen in recent years and yesterday closed down 8.4 per cent, or 2.68p, to 29.2p, valuing it at just £370m.
Boohoo said it believes it is “fundamentally undervalued”.
Sales and profits have suffered due to fierce competition from rivals, including Shein.
And physical stores – including Next and Marks & Spencer – have lured customers away from the internet after the world opened up as lockdowns were lifted.
Chairman Kamani said: “The company has evolved in recent years to offer a offering that is much broader than our original focus on young fashion.
‘The time is now right to consider options regarding the corporate structure, with the aim of maximizing shareholder value.’
In recent years, Boohoo has bought brands such as Dorothy Perkins, Wallis and Burton from Sir Philip Green’s collapsed empire. It also picked up Karen Millen for £18.2m in 2019 and failed department store chain Debenhams for £55m in 2021.
Analysts said it would make sense to sell these two brands to focus on the remaining online retailers, including Pretty Little Thing and Nasty Gal.
Rivals likely to throw their hat in the ring include Frasers Group, which owns about 26 percent of Boohoo, and Next. Russ Mould, investment director at estate agent AJ Bell, said: ‘The starting gun has been fired for the break-up of Boohoo. The sale of Karen Millen and Debenhams is the obvious starting point, allowing Boohoo to focus more sharply on a younger target group.’
Boohoo said sales fell 15 percent to £620 million in the six months to August 31. Profits fell to £21 million from £31 million in the same period last year.
Boohoo has also signed a £222 million debt financing deal, which will pay for the next phases of its turnaround plan.
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