Boohoo shareholders ‘urge bosses to sell off brands’

Boohoo Group is being urged by some shareholders to sell off some of the brands that it acquired during the boom times a few years ago, such as Debenhams and Karen Millen, a newspaper report claims. But it goes further and suggest that an entire break-up of the group is also being suggested.

At least that’s what the report in The Times says, although no parties concerned have commented on it. 

The newspaper said that the unnamed shareholders believe the value in the business could be unlocked by selling even bigger brands that have been seen as core to the group such as PrettyLittleThing and Boohoo itself.

The report said bosses at the company are considering the potential break-up in reaction to the performance of the entire group deteriorating in recent years.

The newspaper didn’t specify which shareholders are applying the pressure to the firm that’s based in Manchester. 

Labels such as Debenhams and Karen Millen are believed to be doing relatively well within the group and this means shareholders can see value in selling them for that reason. But they also believe that a complete break-up could generate significant returns that would counteract the plunge in the share price of the past few years.

At the current share price for the group, it’s valued at less than £370 million. But it’s clear that the value of the individual brands that it owns would probably add up to a lot more than that if sold individually. Only recently rival ASOS’s sale of the Topshop and Topman brands alone – or at least a 75% stake in them – fetched £135 million.

“The sum of the parts at Boohoo is greater than the current market cap,” The Times reported one source saying. “Therefore, if you want to realise that you’ve got to do one thing, ultimately, which is to break it up.”

The newspaper sources told it that there was no certainty of a break-up happening, but with co-founders Mahmud Kamani and Carol Kane considering all options, it’s clearly an option.

A source “close to Boohoo” said Kamani was “listening to investor calls. He’s more aligned on this than anybody else.” 

The report also said that any move is unlikely to happen quickly and the leadership team is closely monitoring the performance over the Christmas trading period before making any final decisions.

As well as the aforementioned brands, the company also owns labels including Dorothy Perkins, Wallis, Burton, Coast, Oasis and Warehouse, the last of which has recently had a major relaunch.

Boohoo had seen a steady rise during its early history and boomed during the pandemic years as consumers were forced to buy fashion online when stores were closed. But it’s fall from grace since then has been spectacular and its plunging share price has meant many major shareholders are unhappy.

However, the cheap share price has also attracted new investors and Frasers Group now has a 26.2% stake. But despite snapping up the shares cheaply that group’s controlling shareholder, Mike Ashley, will obviously want to see value being realised from the business.