Mike Ashley’s Frasers Group has again increased its stake in Boohoo, the fast-fashion business run by Offaly man John Lyttle, bringing his holding to just over 25 per cent.
Frasers declined to say whether the company intends to continue buying until it hit the 30 per cent threshold, at which point it would be required to make a bid for the rest of the company. Mr Ashley has been steadily building his stake in Boohoo since June of last year. Over the past year or so he has spent just over £106 million buying up stock, usually when the shares were trading at or below 35 pence.
When Frasers made its first investment in Boohoo shares it said it was aiming for “growth through strategic investments” and that it saw “potential synergies and an opportunity to strengthen our own brand proposition in collaboration with Boohoo, most obviously with Frasers Group brands I Saw It First and Missguided”.
Since then it has also acquired shares in well-known brands such as Currys, Hugo Boss and THG, another ecommerce company.
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Mr Ashley’s current stake in Boohoo is worth around £111 million at Boohoo’s current share price of just under 34 pence, which is considerably less than it traded at during the pandemic when the shift to online shopping saw Boohoo shares trade above £4.
Since then the retailer has since seen its share price slip significantly, beginning with revelations of forced labour in its supply chain, which led to the company introducing new procedures to “raise standards across its supply chain to protect the welfare of our people and uphold human rights”.
Its trading performance has also slumped as the company faced growing competition in online sales from the likes of Shein, a giant Chinese online retailer, as well as a revival in high street sales since the end of pandemic restrictions.
In its most recent annual results, issued in February, Boohoo saw a 13 per cent drop in its revenues from £2 million to £1.8 million. In a statement at the time Mr Lyttle said the decline in revenues was due to “difficult market conditions, caused by high levels of inflation and weakened consumer demand”, adding that the company was aiming to make savings of £125 million in the coming year.
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