Boohoo paves way for breakup after boss resigns

Boohoo gave the ‘starting gun’ to the dissolution of the company when its boss resigned.

The online fashion group announced a review that calls into question the future of its Karen Millen and Debenhams brands, which could be spun off or sold in a bid to boost their sagging share price.

Chief executive John Lyttle has revealed he is stepping down after five years at the helm of Boohoo, whose brands also include Oasis, Coast, Warehouse, Nasty Gal and Pretty Little Thing.

Analysts said a disintegration of the empire was at stake.

The company was founded in Manchester in 2006 by Mahmud Kamani, 60, and Carol Kane, 58, and has soared in popularity thanks to its appeal to young fashion shoppers. When shares peaked in July 2020 during the Covid-19 lockdowns, Boohoo was valued at more than £5bn.

But the stock has slumped in recent years and yesterday closed down 8.4 per cent, or 2.68p, at 29.2p, valuing it at just £370m.

Boohoo said it believes it is “fundamentally undervalued”.

Sales and profits have taken a hit amid fierce competition from rivals such as Shein.

And brick-and-mortar stores, including Next and Marks & Spencer, have steered customers away from the internet after the world opened up when lockdowns were lifted.

Chairman Kamani said: ‘The business has evolved over recent years and has an offering that is much broader than our original focus on youth fashion.

“The time has come to consider options regarding corporate structure, with the goal of maximizing shareholder value.”

In recent years, Boohoo has bought brands including Dorothy Perkins, Wallis and Burton from Sir Philip Green’s collapsed empire. It also acquired Karen Millen for £18.2m in 2019 and department store chain Debenhams for £55m in 2021.

Analysts said it would make sense to sell these two brands so it could focus on remaining online retailers, including Pretty Little Thing and Nasty Gal.

Rivals that may throw their hat in the ring include Frasers Group, which owns around 26 per cent of Boohoo, and Next. Russ Mould, investment director at brokerage AJ Bell, said: ‘The Boohoo demerger has been kicked off. Selling Karen Millen and Debenhams is the obvious starting point, leaving Boohoo with a greater focus on a younger target market.”

Boohoo said sales fell 15 per cent to £620m in the six months to August 31. Profits fell to £21m from £31m in the same period a year earlier.

Boohoo has also signed a debt financing deal worth £222m, which will pay for the next stages of its recovery plan.