Boohoo shareholders advised to vote against appointment of Mike Ashley to board

A prominent shareholder advisory firm has advised Boohoo investors to reject Frasers Group’s plans to overhaul the online retailer’s leadership.

Institutional Shareholder Services (ISS) said investors in owner Karen Millen should vote against resolutions at the December 20 general meeting that would make Frasers chairman Mike Ashley and restructuring specialist Mike Lennon members of the board of directors.

ISS said the two men have “real conflicts of interest”, noting that Lennon, a close ally of Ashley, has a “history of working closely” with Frasers.

He also accused Frasers, owner of Sports Direct and Boohoo’s largest shareholder, of providing a “superficial view” of the company’s financial results and having “no specific plans for change”.

The recommendation follows another. open letter from ashley posted over the weekend where he blamed Boohoo’s board for presiding over a “catastrophic mess”.

Ashley pointed out that Boohoo shares have plummeted 90 per cent in the last five years and said the company was suffering from “panic-driven mismanagement” that is heavily impacting shareholder value and putting its future at risk. .

Ashley sought to be named the company’s next chief executive after Boohoo announced in October that John Lyttle would step down after five challenging years at the helm.

It came as Boohoo unveiled a business review “to unlock and maximize shareholder value”, sparking speculation that some of its brands would be sold or spun off.

But in a major snub, Boohoo decided to go with Debenhams boss Dan Finley, who was previously group multichannel director at JD Sports for ten years.

In his letter, Ashley described the appointment of Finley, as well as Mahmud Kamani and Tim Morris, to the positions of executive vice president and president, respectively, as the “epitome of chaos, a desperate attempt to mask dysfunction at the top.”

The outspoken retail tycoon also said that after meeting Finley, Boohoo should retain Debenhams and avoid a “fire sale” of assets to help turn around the business.

Finley acknowledged on Monday that Boohoo was “fundamentally undervalued” but said there was “a huge opportunity for the group”.

He added: “Working with Tim, our independent non-executive chairman, overseen by our independent board, I am fully focused on creating maximum value and protecting the interests of all shareholders.”

Following the ISS recommendations, Frasers said in a statement: ‘The ISS view predates Mr Ashley’s statements yesterday.

‘Mister. Ashley set out clearly in her letter of 8 December her determination to work on behalf of all Boohoo shareholders and support Dan Finley to seize opportunities to turn around the group’s fortunes and restore value to shareholders.

‘He has been very clear that he would not want Debenhams to be sold or any asset sales and has made clear his commitment to transparency and shareholder consultation, something that is seriously lacking on the current board.

“To achieve this, Boohoo shareholders must vote on the resolutions on December 20.”

Like many online fashion retailers, Boohoo enjoyed considerable growth during the early days of the Covid-19 pandemic thanks to strict lockdown restrictions on physical stores that led Brits to buy their clothes online.

However, its sales slowed and reduced significantly as those restrictions eased, cost of living pressures intensified and more consumers opted to buy clothing from rivals such as Shein.

In the financial year ending February, Boohoo’s revenue fell by more than £300m to £1.5bn, while its pre-tax losses rose by around three quarters to £159.9m.

Boohoo Group Shares rose 1.7 percent to 35.9 pence on Monday morning, while Frasers Group Shares They were down 0.9 percent at 632.5 pence.