Boohoo responds to Frasers, isn’t embracing idea of Ashley as CEO

Boohoo Group has come back to Frasers Group after Thursday’s bombshell open letter that talked of a leadership crisis and called for Mike Ashley to become its new CEO. The gist of the reply? It’s a sort of ‘recollections may vary’ moment.

The company said its board is “focused on ensuring it takes the right steps to drive Boohoo Group in the interest of all shareholders”.

And despite Frasers’ claims to the contrary, it added that “the board has neither delayed responding to Frasers’ requests for board representation nor ignored them”.

To clarify that, it said: “Frasers’ wish for Mike Ashley to be appointed as a director and chief executive officer was first communicated by Frasers to Boohoo at an in-person meeting on the evening of Friday 18 October, when Frasers sought to establish a 48-hour deadline for the board to confirm that it would proceed to make this appointment. 

“This was the first occasion on which Frasers had identified its preferred board candidate and followed Frasers having formally ruled out Mr Ashley for the role on 9 October and having previously and consistently indicated that its one nominee would perform a non-executive role.”

In addition to that, Boohoo highlighted the issue of competition given the various stakes Ashley has in companies that are rivals to it: “Mr Ashley is a 73% shareholder in Frasers; in addition, Frasers owns a 23.6% stake in ASOS plc, and both Frasers and ASOS operate in similar markets to Boohoo. These are important facts that need to be taken into account and carefully considered by the board.”

Boohoo concluded that it “remains willing to discuss board representation with Frasers in a constructive manner, it has been clear with Frasers that before any appointment can be made, appropriate governance will be required to protect the company’s commercial position and the interests of other shareholders. Boohoo has sought assurances from Frasers in this regard and they have not to date been provided”.

As for the specifics around the CEO role, the company said it’s a “critical board decision which requires careful consideration and proper governance. A process, overseen by the board, and which started prior to the meeting with Frasers on 18 October, is well underway and John Lyttle, the current CEO, will remain in the role until its conclusion”.

Another Frasers complaint had been about Boohoo’s recent debt refinancing, with it bemoaning the terms of the deal.

And Boohoo’s take on this? It said that “Frasers’ characterisation of Boohoo’s recent debt refinancing is inaccurate and unfair. The refinancing provides certainty for the company around its future requirements and is supported by its existing group of high street banks.

“The company’s approach to its recent debt refinancing was discussed on numerous occasions with Frasers and its advisers. As part of those discussions Frasers were advised that the board would be pleased to consider any alternative proposals they might wish to present, but none were forthcoming.”

It’s clear that this story is set to run for a while and it’s also clear that Boohoo wouldn’t have been prepared to roll over and say “come on in” to Mike Ashley.

What happens next is anyone’s guess. We’ll keep you posted.