Frasers Group has recommended Mike Ashley as a solution to Boohoo’s leadership crisis, prompting significant discussion across the industry.
- The suggestion follows John Lyttle’s recent decision to step down as CEO, creating a leadership gap at Boohoo.
- Frasers Group, the prominent shareholder in Boohoo, expressed concerns over the brand’s declining trading performance and share value.
- The communication from Frasers pointed to Boohoo’s refinancing challenges, stressing the need for immediate leadership action.
- Boohoo’s board is currently evaluating the proposal to replace John Lyttle with Mike Ashley.
Frasers Group has taken a decisive step by proposing Mike Ashley as the new CEO for Boohoo Group, amidst what they describe as a leadership crisis following John Lyttle’s resignation. Lyttle’s exit, coming shortly after a significant refinancing announcement, has left Boohoo in a vulnerable position, according to Frasers. As the largest shareholder since June 2023 with a 27% stake, Frasers sees this as a critical moment for Boohoo.
In a detailed letter dated 23 October, Frasers highlighted Boohoo’s ongoing struggles with falling gross profits, which are anticipated to drop for the sixth consecutive period. This decline, they argue, reflects an inability by the current leadership to effectively manage the company’s financial and strategic challenges.
The letter further criticises Boohoo’s new £222 million debt arrangement, describing it as short-sighted and costly, potentially forcing Boohoo into severe operational changes to meet a looming repayment deadline within the next ten months. Frasers Group expressed frustration over Boohoo’s board’s failure to consider alternative refinancing options proposed by Frasers, viewing this as a disregard for shareholder engagement.
Moreover, the correspondence from Frasers, signed by company secretary Robert Palmer, asserts that the current board has consistently failed to address pressing issues or engage constructively with Frasers. This perceived intransigence, they suggest, necessitates the immediate appointment of Ashley, citing his extensive experience as an invaluable asset for steering Boohoo towards recovery.
Boohoo’s board has acknowledged receiving Frasers’ proposal and has committed to scrutinising the details with their advisors. They plan to issue further communications regarding the validity and potential implications of this significant leadership change. This development follows Frasers’ decision to withdraw from their previous offer process for Mulberry, after encountering resistance from Mulberry’s key shareholders.
The appointment of Mike Ashley as Boohoo’s CEO remains under scrutiny as stakeholders await further announcements.
