Boohoo board pressured to break up business to boost share price
Boohoo’s shareholders are reportedly putting pressure on its bosses to break up the fashion conglomerate, which boasts a portfolio of Boohoo, PrettyLittleThing, Karen Millen, Warehouse, Debenhams and more, in an attempt to revive sales and boost share price.
Boohoo was founded in 2006 by Mahmud Kamani and Carol Kane. Back in the early 2010s, the company rode the wave of the online shopping boom and became one of the fastest-growing retailers in the UK.
In recent years, its success prompted a shopping spree, which saw Boohoo Group acquire Misspap, Karen Millen and Coast brands in 2019 and Warehouse and Oasis in 2020. In 2021, Boohoo acquired high street havens Debenhams, Dorothy Perkins, Wallis and Burton.
However, e-tail is suffering after the British high street had a post-pandemic renaissance. Since its acquisition spree, the online-only group has suffered dramatic losses as shoppers returned to stores and overseas Chinese competition, such as Shein and Temu, have toughened the online market.
In the wake of slipping shares, a number of shareholders have urged the board to break up the Manchester-based group and sell its better-performing brands to boost its stock, which has fallen by over 85% in the past five years, according to The Times.
Some investors, such as Frasers Group, have taken advantage of Boohoo’s weaker share price. Frasers now owns a 26% stake, approximately 14% more than Co-founder Kamani.
Sources suggested there was potential value in spinning off or selling fast-fashion brands such as Boohoo, BoohooMan and PrettyLittleThing. “The sum of the parts at Boohoo is greater than the current market cap. Therefore, if you want to realise that you’ve got to do one thing, ultimately, which is to break it up", said one source.
There is no clarity or certainty that the group would be split up or divided but Boohoo's Co-founders were considering all options.
As it stands, the group has built up net debts of £95 million in the year to the end of February, after losses widened 76% to £160 million and sales fell to £1.8 billion.
Earlier this month, the fast fashion giant announced it would be forced to close its Pennsylvania-based distribution centre later this year as part of its strategy to "reposition the group for sustainable, profitable growth".
The company will now fulfil all US orders from its automated distribution centre in Sheffield, in a bid to broaden its product offering for shoppers in the US and expand its routes to market.