Boohoo hits back at Frasers after bid to install Mike Ashley as chief
Boohoo has hit back at Mike Ashley’s Frasers Group after the retailer sent out an open letter yesterday vowing to install him as its new chief.
The fast-fashion giant said it was making the announcement to issue “clarification” on matters raised by Frasers yesterday, including accusations of “long-term mismanagement” which has led to “value destruction“.
In a 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.”
It also said “long-term mismanagement” had led to the collapse of Boohoo’s share price, down almost 30 per cent in the year to date and 17 per cent in the last three months alone.
Frasers further accused Boohoo of ignoring requests for meetings, saying: “We recognise stone-walling when we see it, and these tactics of ‘delay and ignore’ are no longer tolerable in the context of the continued value destruction that the board is overseeing at Boohoo.”
Boohoo said Frasers’ wish for Ashley to be made chief executive was first raised on Friday 18 October, raising concerns that Ashley is a 73 per cent shareholder in Frasers.
In addition, Frasers owns a 23.6 per cent stake in rival ASOS, and the firm flagged that both Frasers and ASOS operate in similar markets to Boohoo.
“These are important facts that need to be taken into account and carefully considered by the board,” the company said.
Boohoo added that it had been willing to meet “in a constructive manner”, but the firm had “been clear with Frasers that before any appointment can be made, appropriate governance will be required to protect the company’s commercial position and the interests of other shareholders.”
“Boohoo has sought assurances from Frasers in this regard and they have not to date been provided,” it said.
It also said “Frasers’ characterisation of Boohoo’s recent debt refinancing is inaccurate and unfair”, insisting the move “provides certainty” for the company around its future requirements and is supported by its existing group of high street banks.
AJ Bell investment director Russ Mould said: “Boohoo has responded robustly to Frasers’ bid to install Mike Ashley as its new CEO, none too subtly questioning if Ashley at the helm is in the interests of shareholders other than Frasers and batting back criticism of its recent refinancing.”
“In the meantime the company has pointedly outlined plans to continue with its own search for a replacement for current boss John Lyttle.”
“Boohoo continues to review the validity of the requisition for a meeting to vote on Ashley’s appointment as CEO but, based on past form, the retail tycoon is unlikely to disappear quietly whatever Boohoo’s response so we can expect this saga to run for some time to come.”