The letter from Frasers Group says it proposed on 20 October that Mike Ashley be appointed as a director and CEO of Boohoo in light of “John Lyttle’s intention to step down as CEO, to take effect as soon as possible”.
Lyttle stepped down as Boohoo Group CEO last week amid a refinancing announcement.
“The recent announcement on 18 October 2024 of the resignation of Mr. Lyttle as CEO creates a leadership void and is an impediment on Boohoo’s return to growth,” it says.
“There is no stronger candidate for CEO who has the experience and abilities of Mr. Ashley and who is in a position to replace Mr. Lyttle as soon as possible.”
Frasers – which has been a shareholder of Boohoo since June 2023 and is the largest shareholder with 27% – sent the open letter yesterday (23 October).
The letter goes on to accuse Boohoo of having an “abysmal trading performance and share price collapse”, saying “when Boohoo announces its half year results in full in November, gross profit will be down for the sixth consecutive reporting period”.
It goes on to say, “the board has lost its ability to manage boohoo’s business and investments”.
“The new £222m [debt] facility is severely short dated, seemingly more expensive than the previous financing arrangement and almost unquestionably leaves the company in a position of needing to undertake drastic corporate actions (whether it be disposals, deeper operational cuts, closures etc.) in order to repay the term loan due in 10 months.
The letter, which is signed by Robert Palmer, company secretary on behalf of Frasers Group pls, says: “Frasers has made repeated attempts to engage with the board on a wide number of urgent and pressing issues facing Boohoo, including the total lack of willingness to consider alternatives which Frasers proposed to the refinancing.
“There has been a complete failure to meaningfully engage with us, your largest shareholder.”
The letter concludes: “In the face of persistent failure by the board to meaningfully engage on this subject and in light of the other above-mentioned major concerns, Frasers has been left with no option but to take action itself in order to provide a solution to boohoo’s leadership crisis.”
A statement from Boohoo says it received the proposal to remove John Lyttle as a director of the company and appoint Mike Ashley as CEO.
“The Boohoo board is in the process of reviewing the content and validity of the requisitions with its advisers. A further announcement will be made in due course.”
Yesterday (23 October), Frasers Group announced it was withdrawing from the offer process for Mulberry after its bids were rejected by both majority shareholder Challice and the board of Mulberry.