Boohoo has completed a fundraising round to fuel its turnaround amid a boardroom bust-up with its biggest shareholder.
Boohoo announced it had conditionally raised £39.3m, including £400,000 from a retail offer and £38.9m from an investor subscription.
Last week, Boohoo reported its results for the six months ending August 31, 2024.
During the period, adjusted losses before tax deepened to £27.4m, while adjusted EBITDA fell by £10.5m to £20.8m. Group revenues slumped by 15% to £619.8m, while gross profits dropped by 19.2% to £314.4m.
Despite its performance, the retailer insisted that in the period, Debenhams “has been repositioned as a leading British online department store”, and that Karen Millen has been transformed “into a digital-first, premium global brand”. It also said its “youth brands”, such as PrettyLittleThing and BoohooMan collectively served more than 14 million customers, with gross merchandise value (GMV) of more than £1.8bn.
Looking ahead, while Boohoo said it still expected some headwinds for its youth brands, it expects a “higher GMV and a stronger adjusted EBITDA performance” in the second half of the financial year.
New group chief executive Dan Finley said: “I believe that the group remains fundamentally undervalued. We have a significant opportunity to create substantial value for all shareholders through our five core brands.
“I’ve been with the group for nearly three years, joining as chief executive of Debenhams in January 2022, transforming it into a highly profitable, capital-light marketplace business. I’m excited at the opportunities I see ahead for the entire group.”
The fundraising round comes amid a power struggle within Boohoo’s leadership team, principally between Boohoo’s co-founder and executive chair Mahmud Kamani and Mike Ashley – the Frasers billionaire who has become Boohoo’s largest shareholder.
Ashley has initiated a boardroom coup, citing a “leadership crisis” and questioning the board’s ability to manage the business and its brands effectively.
Last week, Boohoo called on its other shareholders to vote against all the proposals set out by Frasers, insisting its board can turn the ship around even as its losses deepened in the first half.
Ahead of a general meeting of Boohoo shareholders on December 20, to vote on the proposals, Boohoo has told shareholders it has a “credible plan to unlock and maximise value for the benefit of all shareholders through its business review, and that new CEO Dan Finley is the right chief executive to lead the business”.
The circular goes on to say that Frasers and Ashley “appear intent on disrupting Boohoo’s business review and acting only in its own commercial self-interest”, adding that “Frasers has prior history of this sort of corporate behaviour”.
1 Reader's comment