Stradling the broadsheets and tabloids, Mike Ashley and his Fraser Group are currently engaged in an attempt to effectively take over fast fashion giant boohoo. This is has entered a phase of public mud slinging as both sides seek to discredit the other ahead of the company’s next general meeting where Fraser Group will force a vote to install Ashley and the restructuring specialist Mike Lennon onto the boohoo board.
Mike Ashley has publicly criticized the boohoo board as well as the company’s founder following the freefall in its share price over the last 5 years, which has seen a 90% reduction in its value.
He has branded boohoo’s leadership as ‘lacking a clear strategy’, ‘showing an utter disregard for shareholder views’, and of ‘gross mismanagement’
Fraser Group is the major shareholder in boohoo and currently own 27%, but also critically around 21% of their fierce rival Asos, having recently liquidated their holdings down from 24.3%.
This potential conflict of interest has spearheaded the board’s rebuttal against Fraser Group’s plans and criticisms. Accusing them and Ashley of trying to ‘destabilise’ the company and pointing to past instances of Fraser using their shareholdings to install representatives on boards of companies which would then go in to administration; including the now boohoo owned Debenhams.
Two independent shareholder advisory groups have weighed in, admitting that whilst there is merit to some of the points made by Ashley and Fraser Group, the new Chief Executive Dan Finley should be given the opportunity to right the ship.
This will likely further anger Ashley, who claims he was appointed to block himself from claiming the position.
But is Ashley right to be worried?
Certainly boohoo has had a significant reversal of fortunes since 2022. As well as their share price, their turnover has plummeted by nearly 25% whilst the company has become increasingly loss making; with their most recent results showing a £107,050,000 post tax loss.
Though it should be noted that the dizzying heights of turnover achieved by the company was in the COVID online shopping boom and current turnover is higher than pre-COVID.
Fraser Group, on the other hand has been performing well over the last three years. Seeing a general trend of strong turnover growth and hundreds of millions in post-tax profits.
So is it possible to bring boohoo shares back up to their peak value? Do shareholders need to accept that this value existed in a world that no longer does? This is hard to say, but one thing is certain, boohoo shareholders will be able to vote on if they want Ashley and Finley on the board.