Make-te-minds-up-time is approaching for Boohoo partners in great concern with Mike Ashley. The Sports Direct maestro wants a seat on the Boohoo board for himself and his wife, with the 27% stake Frasers Group holds in the struggling online retailer. The vote takes place on December 20th, and naturally there are insults and entertainment all around.
He could lose both of them if he wanted to. Boohoo, with share price down 90% in five yearsIt certainly deserves a shout out to release the Ashley style wardrobe. The online fashion scene has been turned upside down by the arrival of Shein and others, but Boohoo has added all its mistakes. In short, the company seems to have acquired a pile of brands and labels, including Debenhams, Oasis, Warehouse, Karen Millen and Burton, without a decent plan to manage the spill.
So Ashley’s diagnosis of a “ruinous harvest” at Boohoo is a reasonable assessment. “I see the fear of mishaps resulting in rash decisions that obliterate the value of shareholders and jeopardize the future of the company,” he adds as a measure. So, in brand-spraw-wearing, the Frasers record is far superior, notwithstanding Last week’s post was a useful reminder.
But here is an obvious question. Next week there will be a wide vote on whether Boohoo he shot himself in the foot. He decides if Ashley and a partner are brought to the table to help fix the business. The bottom line is that it can in no way be considered as a fighting party. First of all, Frasers Group, 73% owned by Ashley, also owns 24% of Asos, Boohoo’s direct rival. And also, obviously, it competes directly with Boohoo in its day of selling goods.
Ashley’s response is to promise that, as long as he is a director of Boohoo, he will “never provide confidential information about Boohoo to Frasers, post any advertisement on Frasers, discuss his business with Boohoo or Frasers or accept any advertisement placed on any competitor to Boohoo.”
Sorry, but that appeal reveals common sense. Ashley is a man of many talents, but he cannot be divided in two. The fact that he does not have a seat on the Frasers board does not make him an independent party if he is still the majority of the business. The nomination doesn’t fly.
Boohoo makes many other arguments, such as the idea that Ashley is trying to disrupt Boohoo’s turnaround efforts, and that the Frasers are “only acting in their commercial interests”. That line of attack feels weaker than the conflict-of-interest point, but it’s German: Frasers is free to call for Boohoo, valued at £500m these days, if it wants to.
None of those early turnaround plans under new boss Dan Finley should be taken as confirmation. Frankly, the whole thing would be more likely if Mahmud Kamani said his goodbyes to his co-author, as opposed to shuffling from executive chair to vice-executive chair.
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But a vote on Kamani’s issues is perhaps one of the Frasers’ sought-after meetings. Next week, a vote is scheduled for Ashley. Institutional Shareholder Services, an outfit that advises investors that they can’t help themselves, ticked the right box on this occasion. on the back of Boohoo. Ashley must either order or continue to act externally.