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Boohoo has responded to demands from Mike Ashley’s retail empire to appoint him as chief executive, stating the need to safeguard its commercial interests. The online fast-fashion retailer, which holds discussions with Frasers Group, emphasized the necessity for governance assurances due to Frasers’ stake in rival online retailer Asos. Boohoo stated that it was given a 48-hour ultimatum to decide on Ashley’s appointment as CEO.
Additionally, Boohoo refuted Frasers’ claims regarding its recent £222mn debt refinancing, labeling them as “inaccurate and unfair”. Frasers, formerly Sports Direct, acquired a stake in Boohoo last year and is its largest shareholder. Frasers also holds a significant stake in Asos, which Boohoo highlighted as a factor that needs careful consideration, given the competitive nature of the markets they operate in.
Boohoo stressed the necessity for appropriate governance to protect its commercial position and the interests of other shareholders before any appointment is made. The retailer expressed disappointment in the lack of assurances from Frasers in this regard.
Last week, Boohoo announced the departure of its chief executive John Lyttle and initiated a strategic review that could potentially lead to a breakup of its operations, alongside the debt refinancing. Frasers criticized Boohoo’s management in an open letter, pointing out the significant decline in the company’s shares since their peak in mid-2020.
Boohoo has faced challenges such as subdued demand, rising day-to-day costs, and increased competition from rivals like Shein and Temu in recent times. Frasers raised concerns about Boohoo’s debt refinancing, describing it as short-dated and costly, leading to a need for drastic corporate actions to repay the term loan due in 10 months. Boohoo defended the refinancing, stating that it provided certainty for the company.
Following Frasers’ call for an extraordinary general meeting with shareholders, Boohoo is still deliberating on a comprehensive response to the accusations made by the retail empire.