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- Boohoo revealed it had raised approximately £400,000 from retail investors
- The company revealed last week that its half-year turnover fell 15% to £619.8m.
Boohoo Group has raised almost £40m from shareholders as part of efforts to revive the fortunes of the struggling online retailer.
The owner of PrettyLittleThing, which is locked in a dispute with major shareholder Frasers, revealed it had raised approximately £400,000 from retail investors and a further £38.9m from subscriptions from institutional investors.
Proceeds from the fundraising will go towards repaying a £50m loan due at the end of December and will provide “additional strategic flexibility to maximize value for all shareholders”, Boohoo said.
Last week, Boohoo declared a 15 per cent drop in turnover to £619.8 million in the six months to August 31 due to lower demand for its youth brands.
This contributed to its pre-tax losses quadrupling to £147.3m, as did rising return rates and discounting activity to reduce inventory levels.
Responding to the results, Boohoo’s new chief executive Dan Finley acknowledged: “There have been challenges and we continue to operate within a volatile market.”
More money: Boohoo Group has raised almost £40m from shareholders
Finley was named the new CEO in early November in a dramatic snub to Frasers Group, Boohoo’s largest shareholder, which wanted to appoint Mike Ashley.
Frasers has accused the Manchester-based company’s current management of “continued and long-term incompetence” and presiding over “large-scale value destruction” at the business.
In an open letter last monthcalled on Ashley to replace the outgoing John Lyttle as boss of Boohoo, saying it was the “best solution” to the company’s “leadership crisis”.
While Boohoo decided to go with Finley, Frasers will have the opportunity at an investor meeting on December 20 to vote to install Ashley.
Frasers, whose brands include Sports Direct, Flannels and Evans Cycles, owns a 27 per cent stake in Boohoo, which also owns Karen Millen, Oasis and Dorothy Perkins.
Boohoo experienced massive growth during the early part of the Covid-19 pandemic when tough lockdown restrictions on physical stores encouraged Brits to buy their clothes online.
Its sales subsequently slowed and then declined after those restrictions were eased, cost-of-living pressures increased and competition from rivals such as Shein and Temu increased.
As a result, boohoo shares They have plummeted by more than 90 percent since peaking during the summer of 2020.
They were down 0.3 per cent at 29.9p just before midday on Monday. In its recent fundraising round, Boohoo priced the shares at 31p each.
Russ Mould, investment director at AJ Bell, said: ‘Retail investors may have been put off by the shares being priced above market value at the time of the fundraising.
‘They could have simply placed an order for shares in the market to increase their position without having to pay more than necessary.
“It seems as if Boohoo is offering the retail component for inclusivity reasons, rather than realistically expecting the general public to pay for stock.”
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