Against the backdrop of ecommerce tightening its grip on global retail, one major North West battle has dominated the headlines in recent months – the increasingly bitter battle for control of Manchester fast fashion giant Boohoo between its founder Mahmud Kamani (pictured) and the existing board, and the interloping Mike Ashley, whose own ecommerce giant, Frasers Group, became Boohoo’s largest shareholder in October 2023.
Their rivalry has become a focal point in the industry, so ahead of next week’s general meeting, which will see shareholders again vote on Frasers demands for Kamani and his team to step down and Ashley and co to step up, here’s our primer to the must-watch soap opera of the Northern digital rag trade.
How has the soap opera unfolded so far?
Mike Ashley, owner of Frasers department store and Sports Direct and former owner of Newcastle United FC, among many others, is well-known for his aggressive business tactics and a keen interest in acquiring stakes in various retail companies. He has a history of purchasing struggling high street brands and turning them around. His approach often involves buying significant stakes in companies, giving him influence over their operations and strategic direction.
Boohoo, founded in Manchester 2006, has rapidly grown into a major online fashion retailer, particularly appealing to younger consumers with its fast-fashion model. The company has been on an acquisition spree, purchasing several well-known but struggling high street brands to expand its market presence and diversify its offerings. This strategy has positioned Boohoo as a formidable player in the retail sector, particularly in the online space, but it has struggled recently in the face of cheaper Chinese copycats and bad press over sweat shops and working practices. https://www.prolificnorth.co.uk/news/boohoo-defends-supplier-treatment-following-bbc-panorama-investigation/
The rivalry between Ashley and Boohoo began to intensify around 2020, as both parties sought to capitalize on the challenges faced by traditional retailers. The COVID-19 pandemic accelerated the shift towards online shopping, putting additional pressure on brick-and-mortar stores and creating opportunities for acquisitions.
Key Events:
April 2020 – Boohoo acquires Warehouse and Oasis
Boohoo made headlines in April 2020 when it acquired the online businesses of Warehouse and Oasis, two well-known UK fashion brands that had fallen into administration. This acquisition was part of Boohoo’s strategy to expand its brand portfolio and strengthen its position in the online retail market.
November 2020 – Frasers Group acquires stake in Mulberry
In November 2020, Frasers Group acquired a 12.5% stake in Mulberry, a luxury fashion brand. This move was seen as part of Ashley’s broader strategy to diversify Frasers Group’s portfolio and increase its influence in the fashion sector.
December 2020 – Boohoo acquires Debenhams brand and website
One of the most significant events in this rivalry occurred in December 2020, when Boohoo acquired the Debenhams brand and website for £55 million. Debenhams, a long-standing department store chain, had entered administration, and Boohoo’s acquisition allowed it to expand into new product categories, including beauty and homeware.
January 2021 – Frasers Group criticizes Boohoo’s acquisition
Following Boohoo’s acquisition of Debenhams, Frasers Group publicly criticized the deal, arguing that it would lead to job losses and store closures. This criticism highlighted the tension between the two companies and underscored the competitive nature of their relationship.
February 2021 – Boohoo acquires Arcadia brands
In February 2021, Boohoo further expanded its brand portfolio by acquiring several Arcadia Group brands, including Dorothy Perkins, Wallis, and Burton. These acquisitions were part of Boohoo’s strategy to capitalize on the decline of traditional retail giants and strengthen its market position.
2022 – Frasers embarks on a North West shopping spree
The jaunt will, over the next couple of years, see it taking control or significant shareholdings in North West fashion brands including Studio Retail Group, Missguided, N Brown and I Saw It First
June 2023 – Ashley adds Boohoo to the mix
Boohoo joins Frasers’ shopping list for the first time, with Frasers taking an initial £22m, or 5% stake in the Manchester fast fashion giant
October 2023 – Frasers becomes Boohoo’s biggest shareholder
After several further share purchase since June, Frasers becomes the largest single shareholder in Boohoo with a 13.4% stake. The latest purchase sees Frasers overtake founder, executive chairman and previous majority shareholder Mahmud Kamani’s 12.5% stake.
By February 2024 Frasers has upped its stake to 22% and takeover talk is rife.
October 2024 – Open letter
Frasers writes the first of a series of open letters calling for Kamani’s exit and for Mike Ashley to step in as CEO citing Boohoo’s “abysmal trading performance and share price collapse.” The gloves are off.
Boohoo’s board responds noting that it has “formally ruled out Mr Ashley for the role on 9 October 2024…having previously and consistently indicated that its nominee would perform a non-executive role.”
November 2024 – Boohoo fundraise
Boohoo wins lender consent for a £39.3m fundraise via a share issue to help fund its turnaround plan after reporting a pre-tax loss of £147.3m in the six months to 31 August 2024. It claims the funds will provide a “strong foundation from which to unlock and maximise shareholder value.”
December 2024 – Round 1 to Boohoo
At a general meeting in Manchester, 63.77% of shareholders side with the board and vote against the proposal that Michael Ashley be appointed as a director of the company and 63.76% of shareholders vote against the proposal that Michael Lennon be appointed as a director at a general meeting in Manchester.
January 2025 – Round 2…?
The opponents are now preparing for is set for a second general meeting on January 21. Watch this space.
The rivalry has significant implications for the online fashion industry of the UK as a whole. As both companies vie for control of valuable retail assets, a Frasers takeover could create an ecommerce behemoth that would be tough for rivals to compete with.
On the other hand, if Boohoo retains its independence, it’ll need to hope its much-vaunted turnaround plans work out. If not, in the face of losses in the hundreds of millions, it could find itself becoming Mike Ashley’s next £1 purchase rather sooner than it would like.