Retail tycoon Mike Ashley’s Frasers Group has called for his appointment as the new CEO of Boohoo, where Frasers holds a 27% stake, following concerns about a “leadership crisis” at the fast-fashion retailer.
In an open letter, Frasers urged Boohoo to replace current CEO John Lyttle, who recently announced his intention to step down, with Ashley to address the company’s declining performance.
Frasers Group has cited Boohoo’s poor trading results and collapsing share price as key reasons for the proposed leadership change. Boohoo’s revenue for the six-month period ending in August 2024 dropped by 36.5%, with gross profits expected to decline for the sixth consecutive reporting period. The letter criticised Boohoo’s board for overseeing the long-term collapse in share price, which is down 29% year-to-date and 17% in the last three months.
Frasers Group, a FTSE 100 company, expressed frustration over what it described as Boohoo’s failure to engage meaningfully on its demands for a board refresh, accusing the retailer of employing “delay and ignore” tactics in attempts to meet with executive chairman Mahmud Kamani.
Strategic review and looming showdown
Last week, Boohoo announced a strategic review to explore options for unlocking shareholder value, including a potential break-up of the company and the sale of brands such as PrettyLittleThing, Dorothy Perkins, and Warehouse. This move has set the stage for a potential clash between long-standing rivals Ashley and Kamani, particularly as Frasers Group has steadily increased its stake in Boohoo since June 2023.
Frasers Group believes that appointing Ashley as CEO is the “best solution” to resolve the leadership issues and halt the company’s value destruction. Boohoo, however, is reviewing the requisition with its advisers and has stated that further announcements will be made in due course.
As tensions between Ashley and Kamani escalate, this boardroom battle could shape the future direction of Boohoo as it faces significant financial challenges.