Online retailer boohoo responds to Frasers’ shake-up demands
Bosses at boohoo, the Manchester online fashion retailer under pressure from majority shareholder Frasers Group, have responded to its call to install its founder, Mike Ashley, as CEO.
Frasers made the demand yesterday (October 24) in a withering open letter to boohoo, lambasting its poor performance, as well as a £222m refinance deal which Frasers said would be too costly.
The group, which includes the Sports Direct brand, requisitioned a shareholders’ meeting to implement its suggested changes, which would see Ashley replace boohoo CEO John Lyttle, who has already said he intends to stand down.
It also claimed boohoo’s board failed to respond to its initial approaches.
Yesterday, boohoo acknowledged receipt of the letter, but today it has responded in full.
It said: “The board has neither delayed responding to Frasers’ requests for board representation nor ignored them.
“Frasers’ wish for Mike Ashley to be appointed as a Director and Chief Executive Officer was first communicated by Frasers to boohoo at an in-person meeting on the evening of Friday 18 October 2024, when Frasers sought to establish a 48-hour deadline for the board to confirm that it would proceed to make this appointment. This was the first occasion on which Frasers had identified its preferred Board candidate and followed Frasers having formally ruled out Mr Ashley for the role on 9 October 2024 and having previously and consistently indicated that its one nominee would perform a non-executive role.
“As shareholders will be aware, Mr Ashley is a 73% shareholder in Frasers; in addition, Frasers owns a 23.6% stake in ASOS plc (“ASOS”), and both Frasers and ASOS operate in similar markets to boohoo. These are important facts that need to be taken into account and carefully considered by the Board.
“Whilst the board remains willing to discuss Board representation with Frasers in a constructive manner, it has been clear with Frasers that before any appointment can be made, appropriate governance will be required to protect the company’s commercial position and the interests of other shareholders – boohoo has sought assurances from Frasers in this regard and they have not to date been provided.”
It goes on to say that the separate appointment of a CEO is a critical board decision which requires careful consideration and proper governance. A process, overseen by the board, and which started prior to the meeting with Frasers on 18 October, is well under way, it revealed, and John Lyttle, the current CEO, will remain in the role until its conclusion.”
And boohoo concludes: “Frasers’ characterisation of boohoo’s recent debt refinancing is inaccurate and unfair. The refinancing provides certainty for the company around its future requirements and is supported by its existing group of high street banks.
“The company’s approach to its recent debt refinancing was discussed on numerous occasions with Frasers and its advisers. As part of those discussions Frasers were advised that the board would be pleased to consider any alternative proposals they might wish to present, but none were forthcoming.”
It added that boohoo will publish its interim results in November, saying: “In the meantime, shareholders are strongly advised to take no action in respect of Frasers’ proposals.”
“Boohoo has responded robustly to Frasers’ bid to install Mike Ashley as its new CEO, none too subtly questioning if Ashley at the helm is in the interests of shareholders other than Frasers and batting back criticism of its recent refinancing.
“In the meantime the company has pointedly outlined plans to continue with its own search for a replacement for current boss John Lyttle.
“Boohoo continues to review the validity of the requisition for a meeting to vote on Ashley’s appointment as CEO but, based on past form, the retail tycoon is unlikely to disappear quietly whatever Boohoo’s response so we can expect this saga to run for some time to come.”
