Frasers demands Boohoo vote to appoint Mike Ashley chief executive

Frasers Group has demanded a shareholder vote to appoint its founder Mike Ashely as Boohoo’s new chief executive.

The retail giant, which is Boohoo’s largest shareholder with a 27 per cent stake, criticized the fast fashion brand’s “dismal” performance in an open letter after it refused to “meaningfully participate” in private calls for the Ashley appointment.

It follows current chief executive John Lyttle’s decision to leave Boohoo after a long period of underperformance, sparking rumors of an imminent split with brands Karen Millen and Debenhams thought likely to be on the chopping block.

Frasers company secretary Robert Palmer said Lyttle’s decision to resign had created a “leadership vacuum”, which is acting as “an impediment to Boohoo’s return to growth”.

He added: “In the short term it will be very difficult to find a replacement who can not only revitalize the company, but also provide best-in-class operational oversight.”

Boohoo has endured a period of disappointing sales following the Covid-era boom, amid competition from companies such as Shein.

boohoo shares They are down 24 percent since the beginning of 2024 and about 90 percent in the last five years.

It now has a market capitalization of £348 million compared to a valuation of more than £5 billion at its July 2020 peak.

Frasers also highlighted Boohoo’s £125m cost-saving efforts, which it says “appear to have been eroded by dismal marketing performance”.

He highlighted a recent £222 million debt refinancing announcement, which he described as “very short-term, apparently more expensive than the previous financing agreement and… (leaving) the company in a position of needing to undertake drastic corporate actions… to be able to pay the loan term expires in 10 months.”

Palmer added: ‘Had Boohoo engaged constructively with Frasers on the refinancing, alternative solutions could have been fully explored which could have resulted in a more favorable outcome for all stakeholders.

‘The board has lost its ability to manage boohoo’s business and investments.

“We are convening a shareholders meeting to organize a referendum on the large-scale value destruction and continued long-term incompetence of the current board and to provide a solution to boohoo’s leadership crisis.”

In addition to Ashley’s appointment to the top job, Frasers is asking Boohoo shareholders to approve whistleblower Mike Lennon as a director “to support the execution of a new strategy”.

Responding to the letter, Boohoo said: ‘The Boohoo Board is in the process of reviewing the content and validity of the applications with its advisers. A further announcement will be made in due course.

“In the meantime, shareholders are urged to take no action.”

It comes on the same day as Boohoo launches an international brand refresh, with the group promising its “revitalised brand marks an exciting new era”.

Boohoo marketing director Sam Leach said: ‘Everything about it perfectly sums up who we are as a brand and where we want to be; bold, brave and confident.

“People will always talk about us, so get ready… the boohoo renaissance has begun.”