boohoo Group Secures £222 Million Debt Financing and Announces Strategic Review

Highlights

• boohoo Group has secured a new £222 million debt facility, comprising a £125 million revolving credit line and a £97 million term loan, expected to lower interest costs.
• The Board is conducting a strategic review to unlock shareholder value, highlighting the successful transformations of brands like Debenhams and Karen Millen.
• CEO John Lyttle will step down after five years, facilitating a smooth transition while a successor is found.

boohoo Group plc (LSE:BOO), a prominent online fashion group, has successfully signed a new £222 million debt financing agreement, which will provide essential funding for the next phase of the Group's development. Alongside this financial update, the company has announced plans for a strategic review aimed at unlocking and maximizing shareholder value across its divisions.

Debt Financing Details

The new debt facility comprises a £125 million revolving credit line that will remain active until October 2026 and a £97 million term loan repayable by August 2025. The financing agreement, structured with compounded SONIA plus a margin of approximately 400 basis points, is expected to reduce the overall interest payable by the Group. The refinancing was facilitated with the help of advisors Ashurst and Rothschild & Co.

Strategic Review for Shareholder Value

The Board of boohoo Group believes that the company is fundamentally undervalued, particularly following significant transformations in recent years. These changes have positioned boohoo as a multifaceted business with five core brands targeting a diverse global customer base:

• Debenhams: Once a traditional retail giant, Debenhams has been successfully repositioned as a leading British online department store. It is now profitable and fast-growing, operating a capital-light, cash-generative model with about 5 million active customers. The platform features over 10,000 brands across fashion, home, and beauty.
• Young Fashion Brands: The Group's brands, including PrettyLittleThing, boohoo, and boohooMAN, collectively serve more than 14 million customers with a Gross Merchandise Value (GMV) exceeding £1 billion in FY24. Supported by a state-of-the-art fully automated distribution center, these brands enjoy a robust social media presence, boasting a total of 48.2 million followers across various platforms.
• Karen Millen: This brand has been transformed into a digital-first, premium global brand. There is significant potential for growth through international expansion, licensing, franchising, and the adoption of a marketplace strategy.

Over the past 18 months, boohoo Group has implemented various strategic initiatives to improve operational efficiencies and optimize its cost structure. Notable progress includes the reinvigoration of both Debenhams and Karen Millen, with successful marketplace strategies already in place.

The Board is committed to exploring options that can further unlock shareholder value, emphasizing transparency and open communication with stakeholders. The Group anticipates a higher GMV and stronger adjusted EBITDA performance in the second half of FY25 compared to H1 25, despite continued investments in brand development.

CEO Transition

In a significant leadership change, John Lyttle has announced his intention to step down as CEO after five years with the Group. Lyttle will work closely with the leadership team and Board over the next few months to ensure a smooth transition while a successor is appointed.

Trading Update and Future Outlook

In the wake of the external challenges impacting the youth fashion sector, the Group has reported substantial GMV growth for Debenhams' external marketplace, with an additional 5,000 brands signed during the period. The Group will release its financial results for the six months ending August 31, 2024, in early November 2024, providing further insights into its ongoing performance and strategic direction.