Boohoo co-founder replaced amid battle with Mike Ashley’s Frasers Group
The public spat between Mike Ashley’s Frasers Group and Boohoo has taken another turn as the struggling fast-fashion retailer announced its co-founder Mahmud Kamani was replaced as chairman.
Non-executive director Tim Morris has taken on the role with immediate effect with Kamani becoming vice chairman.
In a statement, the board of the Manchester-headquartered group said it had decided to divide the role of chairman to “enable the company to have an independent chair and allow Mahmud to continue his day to day executive role”.
In a separate statement, Boohoo’s top investor Frasers Group called for a shareholder’s meeting to remove Kamani as a director and to replace him with Mike Ashley and Mike Lennon.
The group’s second open letter described “dismal interim results”, “a lack of transparency”, “imminent and unannounced debt repayment” and “further supply chain allegations”.
Boohoo, which has been struggling with the rise of fast-fashion giants like Shein and Temu, has been accused of reviving ties with a manufacturer it had axed in the wake of its modern slavery scandal by The Times.
The letter set out Frasers Group’s response to Boohoo’s circular statement last week, in which it argued that Ashley and Frasers “attempted to exert influence over the board’s refinancing, business review and appointments to the board for the good of themselves alone, and are acting in their own self-interest.”
Boohoo said: “Frasers has prior history of this sort of corporate behaviour shareholders should ask themselves what Frasers’ true intentions are, and why is it apparently seeking to disrupt the Business Review. Is it purely to maximise value, or is there an ulterior motive to acquire boohoo’s assets for below market value?”
Ironically, Frasers has now accused Kamani of acting in his own self-interest against the health of Boohoo: “[The board] is ultimately run by Mr Kamani, for the benefit of Mr Kamani,” it said, adding that the board was “dysfunctional”.
Why is Mike Ashley targeting Boohoo?
Frasers has accused the retailer of “long-term mismanagement” which has led to “value destruction“, and has criticised its £222mn refinancing, while Boohoo has called Frasers’ take on the business “inaccurate and unfair”.
In a previous letter to the firm, Frasers said Boohoo had a “leadership crisis”, and warned that Boohoo’s “debt refinancing are wholly unsatisfactory”, calling it “a backwards [move] for the company and an appalling outcome for shareholders.”
Mike Ashley has continued to rail against the viability of Boohoo’s business turnaround plan, which saw Boohoo raise just under £40m last week.
Ashley has said the business would be best-placed to deliver shareholder value with him at the helm, but his attempt to become chief executive but suffered a blow when Boohoo appointed Dan Finley to the role.
Investors will still be able to vote on whether to appoint Ashley and restructuring specialist Mike Lennon to the board on 20 December.