“Abysmal trading performance and share price collapse” is how Frasers Group describe Boohoo this morning.
The company has written an open letter today seeking to install its founder, Mike Ashley as CEO.
It accuses the Manchester-based online fashion retailer’s board of having “lost the ability to manage” its business and investments.
It comes less than a week after CEO, John Lyttle announced he was stepping down.
“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,” reads the letter.
Frasers, which now owns 27% of Boohoo, also wants restructuring expert, Mike Lennon to become a director.
This, it stated in the open letter, was “in the best interests of boohoo, its shareholders and its stakeholders”.
“We continue to believe strongly in the potential of the boohoo business,” it reads. “However, the Company urgently needs to address the management of its business.”
Last week boohoo took out a £222m debt facility, which was also critiqued in the letter, called “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.”
Frasers added that it had made “repeated attempts” to engage with the boohoo 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.”
Later it stated:
“We recognise stone-walling when we see it, and these tactics of ‘delay and ignore’ are no longer tolerable in the context of the continued value destruction that the Board is overseeing at boohoo.”
The letter is signed by Robert Palmer, the Company Secretary of Frasers Group plc.
Boohoo responded to acknowledge the letter and request for an extraordinary general meeting.
“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,” it stated.
“In the meantime, shareholders are urged to take no action.”
