Boohoo warns ‘desperate people do desperate things’ after criticism from Frasers about ‘grossly exaggerated’ remarks

In the latest open letter to shareholders, which was published earlier today, Frasers said both Mike Ashley and Mike Lennon wanted to “address the governance concerns raised by Boohoo” and provide “the governance commitments set out” should the two succeed in being appointed to the board.

Frasers said in the letter that Boohoo has “grossly exaggerated” any conflicts and governance concerned as a “thinly-veiled excuse” to not appointed Ashley or Lennon as directors.

The group continued: “In Frasers’ view, what this boils down to is that Mahmud Kamani, Boohoo’s executive vice chair, does not want Mr. Ashley or Mr. Lennon appointed, as he fears this would dilute his influence over the board.

“Frasers firmly believes that these appointments are in the best interests of Boohoo, all of its shareholders and all of its stakeholders.”

In response to concerns raised about the clash of interest in regard to Frasers also owning a stake in Asos, the group said there is “virtually no overlap between the two businesses” and that it is “not an insider of Asos, it is only a shareholder”.

Frasers added that the only competition could come from House of Frasers in relation to Debenhams but that the crossover between the two is “tiny”.

The letter finished with Frasers asking for shareholder votes in favour of the resolutions and said that if this happens, Boohoo has “the potential to become a valuable and profitable business”.

In response to the letter, a spokesperson for Boohoo said: “Independent shareholders be warned. Desperate people do desperate things.”

A new response

In an update on the morning of December 13, Boohoo has continued to emphasise that it will not recommend the appointment of Mike Ashley or Mike Lennon to the board due to their “irreconcilable conflicts of interest given their embedded relationship with Frasers and Frasers’ prior form”.

The statement by Boohoo added that it is still willing to discuss board representation with Frasers in a “constructive manner,” and is willing to give Frasers a single seat on the board to an “appropriate candidate”. 

Boohoo Group chair Tim Morris said: “The Board has consistently said that due to obvious conflict points and because of their historical ties to Frasers, Mike Ashley and Mike Lennon are not appropriate candidates to join the Board in any circumstances, whatever commitments are offered.

“Notwithstanding that, Frasers continues to refuse to agree to a number of the key protections that the Board would require should an appropriate representative be nominated. These are key issues which need to be addressed for the protection of all Shareholders and it is not for Frasers to pick and chose which commitments it will give”.

Drapers also reported that Boohoo Group is understood to have entered a consultation with around 200 staff members, inlcuding over a hundred roles at its head office in Manchester as it aims to cut costs.

Those affected are reported to include roles in buying, merchandise, design, marketing, analytics and tech across both Boohoo and Pretty Little Thing.