Boohoo has cautioned investors over Frasers Group’s recent demand to make its founder Mike Ashley the chief executive of the struggling online fashion firm.
London-listed Boohoo said on Friday that the call by Frasers Group, which is a major investor in Boohoo, “requires careful consideration”, partly because Frasers also owns a major stake in competitor Asos.
On October 24, Frasers – which is Boohoo’s largest shareholder with a 27% stake – called for a meeting of Boohoo investors to back its plans to appoint Mr Ashley.
In an open letter, Frasers claimed it is “in the best interests of Boohoo, its shareholders and its stakeholders”.
The firm said Mr Ashley could take on the role at Boohoo, replacing chief executive John Lyttle “without delay”, while it also wants restructuring expert Mike Lennon to join the board.
Frasers cautioned over what it claimed was a “leadership crisis” at the retailer after Mr Lyttle announced he was stepping down last week.
But Boohoo’s response on October 25 indicated that it was unwilling to be forced into a snap decision following the letter’s publication.
Boohoo revealed that Frasers’ wish for Mr Ashley, who owns 73% in Frasers, to be appointed as Boohoo chief executive was first mooted in person on Friday October 18, when Frasers gave it just 48 hours to make a decision.
The update also said Frasers had also “formally ruled out Mr Ashley for the role” just 10 days earlier.
Moreover, Boohoo bosses are concerned over Frasers’ 23.6% stake in Asos, a competitor to Boohoo.
“These are important facts that need to be taken into account and carefully considered by the Board,” it said on Friday.
It said Boohoo chiefs are “willing to discuss” Frasers installing a senior figure on Boohoo’s board, but “appropriate governance will be required” to protect shareholder interests.
“Boohoo has sought assurances from Frasers in this regard and they have not to date been provided.”
It follows Mr Lyttle’s announcement last Friday that he would step down after five years as chief executive, but continue to work with the leadership team to ensure a smooth transition.
At the same time, Boohoo revealed plans for a strategic review, sparking speculation regarding a potential break-up of the business.
Boohoo also reported that revenues had dropped by 15% to £620 million for the six months to August 31.
Boohoo shares were up 2.7% on Friday morning.