Frasers calls for Boohoo vote to make Mike Ashley CEO

Frasers Group has demanded a shareholder vote on appointing its founder Mike Ashely as the new chief executive of Boohoo.

The retail giant, which is Boohoo’s biggest shareholder with a 27 per cent stake, slammed the fast fashion brand’s ‘abysmal’ performance in an open letter after it refused to ‘meaningfully engage’ with private calls for Ashley’s appointment.

It follows incumbent chief executive John Lyttle’s decision to step down from Boohoo after an extended period of underperformance, sparking rumours of a looming break-up with the Karen Millen and Debenhams brands thought likely for the chopping block.

Frasers company secretary Robert Palmer said Lyttle’s decision to step down had created a ‘leadership void’, which is acting as ‘impediment on Boohoo’s return to growth’.

He added: ‘Finding a replacement who can not only reinvigorate the company, but also deliver best-in-class operational oversight, will be very difficult to achieve in the near term.’

Boohoo has undergone a period of disappointing sales after a Covid-era boom, amid competition from the likes of Shein.

Boohoo shares are down 24 per cent since the beginning of 2024 and around 90 per cent over the last five years. 

It now has a market cap of £348million compared to a valuation of over £5billion at its July 2020 peak.

Frasers also noted Boohoo’s £125million cost-saving efforts, which it says ‘appear to have been eroded by abysmal go-to-market performance’.

It highlighted a recent debt refinancing announcement worth £222million, which it described as ‘severely short dated, seemingly more expensive than the previous financing arrangement and…[leaving] the company in a position of needing to undertake drastic corporate actions…in order to repay the term loan due in 10 months’.

Palmer added: ‘Had Boohoo engaged constructively with Frasers on the refinancing, alternative solutions could have been fully explored which may have resulted in a more favourable outcome for all stakeholders.

‘The board has lost its ability to manage boohoo’s business and investments.

‘We are requisitioning a shareholder meeting to provide a referendum on the large-scale value destruction and long-term and continued incompetence of the current Board and to provide a solution to boohoo’s leadership crisis.’

In addition to Ashley’s appointment to the top job, Frasers is calling on Boohoo shareholders to approve insider Mike Lennon as a director ‘to support the execution of a new strategy’.

In response to the letter, Boohoo said: ‘The Boohoo Board is in the process of reviewing the content and validity of the requisitions with its advisers. A further announcement will be made in due course.

‘In the meantime, shareholders are urged to take no action.’