Billionaire Mike Ashley has accused the leadership of fast-fashion retailer Boohoo of “blatant hypocrisy” in their efforts to block his attempts to join the company’s board of directors.
In an open letter to shareholders on Thursday, Ashley’s Frasers Group claimed that Boohoo had exaggerated concerns about conflicts of interest and governance in an attempt to prevent him and restructuring expert Mike Lennon from joining the board.
Boohoo’s cofounder and Executive Vice Chairman, Mahmud Kamani, opposes the appointments, fearing they would weaken his influence on the board, the letter stated.
Frasers warned that if Ashley and Lennon’s bids to join Boohoo’s board are blocked, it could lead to further value destruction for shareholders.
Boohoo shareholders are set to vote on the appointments on December 20. The company’s London-listed shares have fallen more than 91% from their peak in June 2020, a time when online shopping surged due to the pandemic.
The retailer, which owns Debenhams, Karen Millen, and PrettyLittleThing, is under pressure to reverse declining revenues while facing stiff competition from brands like the Chinese online retailer Shein.
Boohoo recently reported a 7% drop in gross merchandise value (after returns) to £1.2 billion ($1.5 billion) for the six months ending in August. Sales have fallen across the UK, US, and international markets.
In November, Dan Finley replaced John Lyttle as Boohoo’s CEO as part of efforts to improve the company’s performance. Boohoo also secured £222 million in debt refinancing in October.
Founded in Manchester in 2006 by Kamani and Carol Kane, Boohoo began as an online retailer offering fashionable clothes at low prices. The company went public in 2014.
Ashley, who has a history of building stakes in struggling retailers, holds a 27% share in Boohoo through his Frasers Group. He also owns 24% of rival Asos, which Boohoo claims presents a conflict of interest.
Boohoo’s board has been joined by shareholder advisory firms Glass Lewis and Institutional Shareholder Services (ISS) in recommending that shareholders vote against the appointments of Ashley and Lennon.
The retailer has accused Frasers of attempting to “disrupt” and “destabilize” Boohoo’s operations for its own commercial benefit, citing Frasers’ past corporate actions as evidence.
Ashley previously sought to become Boohoo’s CEO but was rejected in favor of Finley, who had been managing Boohoo’s Debenhams online operations.
Ashley’s Frasers Group had also contested Boohoo’s control of Debenhams after the 240-year-old department store went into administration in 2019.
With a net worth of $4.4 billion, Ashley is the founder of Sports Direct and has expanded his empire through acquisitions of companies like House of Fraser and Flannels. He stepped down as CEO of Frasers Group in 2022, handing over the role to his son-in-law, Michael Murray. Ashley also resigned from Frasers’ board later that year.
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