Boohoo rings the changes for the battle ahead

Beleaguered online fashion retailer Boohoo has replaced its finance director as it faces pressure to arrest a declining share price, predatory investor activity and multiple reputational challenges.

In two separate announcements to the stock market this morning it was revealed that Shaun McCabe was OUT, and then followed it with a second announcement that he will be replaced by Stephen Morana, a former non-executive director at the Manchester-based clothing retailer. 

McCabe’s departure is immediate, but Morana won’t be in post until 19 February 2024. 

Stephen Morana

The company also said trading remains “in line with market expectations”, and that it will report final results for the year ended 28 February 2024 “in May”.

McCabe’s departure was “by mutual agreement” and he has also stepped down from the board with immediate effect.

He joined Boohoo in October 2020 as an independent non-executive director and was chair of the Audit and Risk Committees. He stepped up to be CFO in October 2022, replacing Neil Catto.

Morana has e-commerce and capital markets expertise and was CFO at Betfair and Zoopla, both of which he led through to a stock market float, and Boohoo claim hopefully, “helped to create significant shareholder value”. 

He has also been a non-executive director at Entain, the FTSE100 group and was a non-exec at Boohoo from 2014 to 2017. 

He has also been a venture partner at Octopus Ventures, one of the more enlightened venture firms in the financial world and most recently held an executive position with Cazoo plc. 

Mahmud Kamani

Mahmud Kamani, Boohoo founder and group executive chairman, commented: “Stephen is a highly regarded finance director who is well known to Boohoo, having previously served on our board in a non-executive capacity for four years. He supported us through the IPO process and in our early years as a PLC. While the business has grown significantly since then, Stephen has a wealth of experience with global digital businesses and is therefore very well placed to support the strategy in pursuit of our growth ambitions.”

Mike Ashley’s Fraser’s group is now the largest shareholder in the fast-fashion group Boohoo, with its 22 per cent stake overtaking co-founder Mahmud Kamani.

Stephen Morana, holds 129,097 shares in Boohoo, and will have to rebuild confidence with the shareholder base, including Ashley. Last year at the annual general meeting 37.39% of shareholders opposed an incentive plan put forward by the board.

Reputationally, though not financially, Boohoo has also become embroiled in an often vicious takeover battle for Revolution Beauty, and faced an undercover sting by the BBC’s Panorama programme. Though it didn’t adversely affect the share price at the time, the programme revealed that a supplier in Leicester was scrambling to meet an order from Boohoo, and also found orders placed through Boohoo’s so-called flagship Thurmaston Lane factory in Leicester were in fact being made by factories in Morocco and another four suppliers in Leicester.

Last year 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 and was 34p at the opening of the market today.

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “There wasn’t too much for investors to chew over in Boohoo’s latest update on trading. There will be some relief the company is on track to hit the downbeat expectations unveiled in October but that is overshadowed by the departure of chief financial officer Shaun McCabe with immediate effect.

“It’s the kind of development which reinforces the impression there’s too much noise around Boohoo, whether it’s ethical questions over its supply chain, sustainability concerns around fast fashion or a boardroom battle with fellow AIM company Revolution Beauty.

“McCabe had only been in the job for a little over a year and to lose a finance chief so rapidly is never a great look, even if Betfair and Zoopla alumni Stephen Morana looks a solid appointment as his replacement.

“The fact Morana has previously served on Boohoo’s board as a non-executive director should mean he has a decent handle on the business, too.

“He rejoins the company at a challenging time. The shares trade at a fraction of their pandemic highs as the whole online fast fashion model, of which it is a leading proponent, comes into question.”