Frasers demands Boohoo votes to appoint Mike Ashley as CEO

Frasers Group has demanded a shareholder vote on the appointment of founder Mike Ashely as Boohoo’s new CEO.

The retail giant, Boohoo’s largest shareholder with a 27 percent stake, slammed the fast fashion brand’s “appalling” performance in an open letter after it refused to “meaningfully comment” on private discussions for Ashley’s appointment.

It follows incumbent CEO John Lyttle’s decision to resign from Boohoo after a long period of underperformance, sparking rumors of an impending split with brands Karen Millen and Debenhams likely to be on the chopping block.

Frasers company secretary Robert Palmer said Lyttle’s decision to resign has created a “leadership void” that is a “hinder to Boohoo’s return to growth”.

He added: ‘Finding a replacement who can not only revive the business but also provide the best operational oversight will be very difficult to achieve in the short term.’

Boohoo has endured a period of disappointing sales after a Covid-era boom, amid competition from the likes of Shein.

Boohoo shares have fallen by 24 percent since the beginning of 2024 and by about 90 percent over the past five years.

It now has a market capitalization of £348 million, compared to a valuation of more than £5 billion at its July 2020 peak.

Frasers also noted Boohoo’s £125m cost-cutting efforts, which it said ‘seem to have been eroded by abysmal go-to-market performance’.

It highlighted a recent announcement of a £222 million debt refinancing, which it described as ‘very short-term, apparently more expensive than the previous financing arrangement and…(leaving) the company in a position where it must take drastic corporate action …to repay the debts. the term loan with a term of ten months’.

Palmer added: ‘Had Boohoo worked constructively with Frasers on the refinancing, alternative solutions could have been fully explored, potentially leading to a more favorable outcome for all stakeholders.

“The board has lost its ability to manage Boohoo’s business and investments.

‘We demand a shareholders’ meeting to hold a referendum on the large-scale value destruction and long-term and persistent incompetence of the current board, and to provide a solution to Boohoo’s leadership crisis.’

In addition to Ashley’s appointment to the top job, Frasers is calling on Boohoo shareholders to approve insider Mike Lennon as director ‘to support the execution of a new strategy’.

In response to the letter, Boohoo said: ‘Booohoo’s board is in the process of assessing the substance and validity of the claims with its advisors. A further announcement will be made in due course.

‘In the meantime, shareholders are urged not to take any action.’

It comes on the same day that Boohoo rolls out an international brand refresh, with the group promising that its ‘revitalised brand marks an exciting new era’.

Boohoo marketing director Sam Leach said: ‘Everything about it perfectly reflects who we are as a brand and where we want to be; courageous, courageous and confident.

“People will always talk about us, so get ready… the boohoo renaissance has begun.”