Boohoo has hit back at Mike Ashley’s retail empire over demands to install the sportswear tycoon as chief executive, saying it needed to “protect its commercial position”.
The online fast-fashion retailer said on Friday that while it was willing to discuss board representation with Frasers Group, which owns about 27 per cent of Boohoo, it would require governance assurances to protect its interests because of Frasers’ stake in rival online retailer Asos. The company added it was given a 48-hour deadline to decide whether to appoint Ashley as chief executive.
Boohoo also called Frasers’ characterisation of its recent £222 million (€266 million) debt refinancing “inaccurate and unfair” after Frasers raised concerns over its terms in an open letter published on Thursday.
Ashley’s Frasers, formerly Sports Direct, built a stake in Boohoo last year and is its largest shareholder. The FTSE 100 company also owns a 23.6 per cent stake in Asos, which Boohoo said needed to be “carefully considered”, noting that both Frasers and Asos compete in similar markets to it.
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“Before any appointment can be made, appropriate governance will be required to protect [Boohoo]’s commercial position and the interests of other shareholders,” the retailer said, adding it had received no such assurances from Frasers so far.
It comes after Boohoo said last week that Irish chief executive John Lyttle would step down as it announced a strategic review of its operations that could lead to it being broken up, and the £222 million debt refinancing.
Frasers accused Boohoo of mismanagement in the open letter, following a more than 90 per cent fall in the fast-fashion group’s shares since their peak in mid-2020, when it was buoyed by a pandemic-era online shopping boom.
Since then, Boohoo has grappled with more subdued demand and higher day-to-day costs from factors including returns, as well as increased competition from rivals such as Shein and Temu.
Frasers said Boohoo’s debt refinancing was “severely short-dated, seemingly more expensive than the previous financing arrangement and almost unquestionably leaves the company in a position of needing to undertake drastic corporate actions in order to repay the term loan due in 10 months”, which Boohoo rejected.
It described the criticism as “inaccurate and unfair” and said it provided certainty for the company.
Boohoo is still considering a fuller response after Frasers called for an extraordinary general meeting with shareholders. – Copyright The Financial Times
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