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Frasers Group PLC (LSE:FRAS) has heavily criticised Boohoo Group PLC (LSE:BOO) for what it describes as "abysmal" trading performance and mismanagement, which it claims has led to significant value destruction for the online fashion retailer. Frasers, which holds a 27% stake in Boohoo, expressed its dissatisfaction in an open letter signed by company secretary Robert Palmer, accusing Boohoo’s board of losing control of the business.
In the letter, Frasers proposed that its founder and FTSE 100 figurehead Mike Ashley should take over as chief executive to help address Boohoo’s leadership crisis. This suggestion comes after the resignation of Boohoo’s current CEO, John Lyttle. According to Frasers, Ashley’s leadership would be the best solution to turn around the company’s declining share price and profitability.
Frasers further criticised Boohoo’s handling of recent debt refinancing, describing the £222 million facility as "short-dated" and "more expensive" than the previous arrangement. The letter suggested that the new financing plan puts Boohoo in a precarious position, potentially requiring drastic corporate actions to repay the term loan within the next 10 months.
Frasers has now requisitioned a general meeting of Boohoo shareholders to vote on appointing Mike Ashley as CEO and restructuring expert Mike Lennon as a director to help steer the company in the right direction. Boohoo, in response, has stated it is reviewing the validity of the requisitions with its advisers and will make further announcements in due course.
Shares in Boohoo rose nearly 4% following Frasers' letter. However, Boohoo’s stock remains down over 80% compared to three years ago, highlighting the extent of the challenges it faces.
