Frasers ups its stake in boohoo as share price remains depressed

High street raider, Mike Ashley’s Frasers Group, has increased its stake in Manchester online fashion retailer, boohoo.

Frasers now owns more shares than co-founder, Mahmud Kamani, after upping its stake to 15.12%, worth £56.6m, based on Friday’s closing share price of 29.52p.

Kamani holds a 12.9% stake in the group.

Frasers is bolstering its holdings in a range of retailers, including boohoo, such as electrical retailer Currys, Bolton-based online electrical firm AO World, and online fashion group Asos.

The former Sports Direct group began building a stake in boohoo in June this year, saying it it saw “potential synergies” for two of its brands, I Saw It First and Missguided, claiming a closer relationship could lead to collaborations.

Earlier this month boohoo revealed that its interim sales had fallen and losses widened, and warned that annual revenues could fall by as much as 17%. The group has embarked on a £125m cost savings drive.

The group said its back to growth strategy will unlock a significant growth opportunity over the medium term.

However, its share price has tumbled from a year-high of 60.94p per share to around 29.70p today.

Russ Mould, investment director at Manchester-based investment platform, AJ Bell, said: “Frasers now owns 15.12% of boohoo, having taken advantage of share price weakness to increase its stake. Boohoo’s shares last week traded at their lowest level since 2015.

“Boohoo has been struggling with cost pressures and weak demand, which have squeezed its margins and left the business loss-making.

“Frasers loves a bargain and clearly sees an opportunity to have influence over boohoo’s strategy, possibly as another avenue to sell its range of athleisure brands.”

He added: “But equally, Frasers might be viewing this simply as a way to make a quick buck – a chance to buy shares on the cheap and then flip them should the online retailer be successful in its turnaround efforts.”