Boohoo warns of ‘Studio Retail 2’ in latest salvo against Frasers Group

The latest instalment of the boohoo-Frasers Group saga aired this morning (December 10), with the Manchester-based online fashion retailer claiming a Frasers victory would repeat the rapid decline of North West online platform Studio Retail, which Frasers Group acquired out of administration in February 2022.

Derbyshire-based Frasers, which includes the Sports Direct brand and is the biggest boohoo stakeholder with a 28.1% shareholding, wants to oust boohoo co-founder and executive chairman, Mahmud Kamani, and install Mike Ashley and Mike Lennon on the board.

A General Meeting will take place on the morning of December 20, at the Manchester offices of Addleshaw Goddard, where boohoo is urging shareholders to reject the Frasers bid.

Both parties have wooed boohoo stakeholders over recent months with their arguments over the future of the Manchester business.

Today, boohoo once again urged shareholders to reject the Frasers approach, citing the plight of Studio Retail, which operated from sites in Accrington, Trafford and Widnes.

In an open letter to its shareholders today, the boohoo board writes: “Frasers’ demands form part of an ongoing campaign by Frasers which appears to be designed to destabilise boohoo and disrupt your board’s plans to unlock and maximise shareholder value.

“The board is of the view that in pursuing this campaign, Frasers is acting only in its own commercial self-interest and not in the interests of other shareholders.

“This is not the first time Frasers has acted in this way: Shareholders are again reminded of the precedent situation at Studio Retail Group plc where Frasers used its shareholding of just under 30 per cent. to exert significant pressure on the existing management team.

“This included attempts by Mike Ashley to be appointed as chairman of the board and a separate shareholder requisition with the objective of installing Benjamin Gardener to the board.

“The business of Studio Retail Group was then put into administration. Frasers ultimately succeeded in acquiring the business out of administration for £1 and settled the businesses’ remaining secured liabilities for approximately 50 per cent. of their face value.

“Studio Retail’s other shareholders are likely to lose the entire value of their investments.”

Boohoo said it is not deliberately seeking confrontation with Frasers and is willing, on certain terms, to appoint a “suitable non-executive director at Frasers’ request”.

But it adds: “The board rejects in the strongest terms the strong-arm tactics used to pursue Frasers’ demands to date and does not accept Frasers’ proposal that Mike Ashley or Mike Lennon are suitable independent candidates for appointment to your board.”

In the latest open letter, the boohoo board also says it has requested governance commitments from Frasers to address the obvious commercial and regulatory issues in this situation, which it claims have all been either ignored or declined.

Boohoo directors hold 14.12% of company shares, which they say will be used to reject the Frasers approach, and they implore fellow shareholders to follow their lead.