Boohoo Group has embarked on a significant fundraising effort amid financial challenges. It aims to raise up to £39.3 million through a proposed share placement.
- The Group reported a pre-tax loss of £147.3 million, marking a sharp increase from £36.6 million a year earlier.
- Revenue declined by 15% to £619.8 million, with a fall in adjusted EBITDA and gross profit.
- Despite financial setbacks, brands like Karen Millen and Debenhams experienced growth in gross merchandise value.
- CEO Dan Finley remains optimistic about unlocking shareholder value amidst market volatility.
Boohoo Group has initiated a fundraising campaign intended to gather up to £39.3 million through the issuance of new ordinary shares. This strategic move is designed to provide the company with additional flexibility in its operations, particularly as it faces increasing financial losses. The fundraising announcement came amid rising pre-tax losses, which reached £147.3 million for the six months ending 31 August 2024, compared to £36.6 million in the same period last year.
During this period, the group also experienced a 15% decline in revenue, amounting to £619.8 million. The adjusted EBITDA dropped by 10.5% to £20.8 million, while gross profit saw a reduction of 19.2%, settling at £314.4 million. These figures highlight the challenging financial landscape Boohoo is navigating.
Despite these setbacks, Boohoo’s portfolio contains success stories. Brands such as Karen Millen saw a 2.3% rise in gross merchandise value pre-returns, reaching £78.3 million. Simultaneously, Debenhams demonstrated significant progress with a 31.2% increase, culminating in a GMV of £265.5 million.
The newly appointed CEO, Dan Finley, conveyed a positive outlook, stating that the group remains undervalued. He emphasised the potential for creating substantial shareholder value through its core brands. Finley highlighted Debenhams’ marketplace and beauty sectors, which showed over 170% growth in year-on-year GMV, outlining the group’s achievement of on-boarding over 10,000 brands ahead of target.
Additionally, Boohoo issued a circular urging shareholders to oppose certain resolutions by Frasers Group, scheduled for a vote on 20 December. This is part of an ongoing dispute, marked by Frasers’ significant stakes in UK retailers, including Boohoo, which Boohoo suggests is an attempt to advance Frasers’ own interests at the expense of other shareholders. This conflict is underscored by public criticism from Mike Ashley regarding Boohoo’s financial strategies, along with his proposal to assume the position of chief executive of the company.
Boohoo Group’s fundraising initiative represents a critical effort to stabilise and steer the company towards future growth amidst current financial pressures.
