Mike Ashley Pursues CEO Role at Boohoo Fashion Retailer

Mike Ashley has urged the fashion retailer Boohoo, in which he owns a 27% stake, to name him as its new chief executive in an open letter addressed to the company’s board.

Frasers Group, the retail firm overseen by Ashley, announced plans to call a general meeting of Boohoo to appoint both Ashley as a director and CEO, and Mike Lennon, managing director at Kroll Advisory, as a director, effective immediately.

The group characterized this initiative as a resolution to what it termed a “leadership crisis” at Boohoo. Recently, Boohoo revealed that CEO John Lyttle would be leaving the troubled company after five years at the helm.

Frasers Group claimed that Boohoo urgently needs to “address the management of its business” and pointed out the fashion retailer’s “abysmal performance and share price collapse.”

It noted that Boohoo’s sales have dropped by 36.5% over the past three years, comparing the half-year period ending on 31 August 2024 to the same period in 2021. Furthermore, its share price has experienced a decline of over 29% this year, with about a 17% drop in the last three months.

Last week, Boohoo finalized a £222 million debt refinancing deal aimed at facilitating its “next phase of development.” However, Frasers criticized the refinancing’s terms as “wholly unsatisfactory,” arguing it represents a “step backward for the company and a disappointing outcome for shareholders.”

The group asserted that the new debt arrangement is “severely short dated, seemingly more expensive than the previous financing agreement, and likely places the company in a position where drastic corporate actions (like disposals, deeper operational cuts, or closures) are needed to repay the term loan due in ten months.”

It added: “Had Boohoo constructively engaged with Frasers regarding the refinancing, alternative solutions could have been thoroughly explored that might have resulted in a more advantageous outcome for all stakeholders.”

The online fashion retailer disclosed last week that it was considering breaking up the business as it sought ways to “unlock and maximize shareholder value.” Frasers emphasized: “Given our concerns about the refinancing and the upcoming repayment deadline, we want to stress that no disposals should occur without consulting Frasers and all other major shareholders.”

Frasers mentioned that it has made numerous efforts to engage with the Boohoo board on various urgent issues impacting the company, including the board’s reluctance to consider alternatives proposed by Frasers regarding the refinancing.

It lamented the “complete failure to meaningfully engage with us, your largest shareholder.”

Frasers revealed that it had repeatedly offered to nominate an “experienced individual” to the board and had suggested appointing Ashley as director and CEO following Lyttle’s resignation when its advisers met with a non-executive director of Boohoo last Friday.

Frasers stated: “As of this letter’s date, we have yet to receive a decision from the board concerning Mr. Ashley’s appointment. Rather, we have encountered delaying responses in a scenario where time is of the essence. Consequently, Frasers must assume that the board has dismissed our proposal for board representation.

“In light of the board’s ongoing failure to engage substantially on this issue…Frasers has felt compelled to take action itself to confront Boohoo’s leadership crisis.”

The owner of Sports Direct firmly maintained that these appointments serve the best interests of Boohoo, its shareholders, and stakeholders, asserting that they are the sole path to forge a new direction for Boohoo’s future, while urging the retailer’s shareholders to support its initiatives.

Boohoo stated: “The Boohoo board is currently reviewing the content and validity of the requisitions with its advisers. A further announcement will be made in due course.”

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