Boohoo faces boardroom battle as losses balloon, raises £39m

14th Nov 2024 07:28

(Sharecast News) - Boohoo Group confirmed it had raised £39m on Thursday, after half-year losses at the fast fashion retailer swelled.

It also urged shareholders to reject moves by retail tycoon Mike Ashley to join the board.

The struggling online-only business said it had raised £39.3m from new and existing shareholders, through a 31p per share placing, a 3% premium to the previous closing price.

Proceeds will be used to reduced borrowings and provide "strategic flexibility", it said.

The update came as Boohoo, which also owns the brands Debenhams, PrettyLittleThing and Karen Millen, posted interim numbers after markets had closed on Wednesday.

Revenues in the six months to 31 August slumped 15% to £619.8m, while adjusted losses before tax ballooned to £27.4m from £9.1m a year previously.

New chief executive Dan Finley said: "There have been challenges, and we continue to operate within a volatile market." He also insisted the group remained "fundamentally undervalued".

The AIM-listed retailer has seen its share price tank by nearly 90% over the last five years.

Boohoo has been hit by a slide in demand while returns and costs have mounted. Competition from the likes of Shein and Temu has also increased.

Mike Ashley's Frasers, its biggest shareholder, has becoming increasingly vocal in its criticism. It has accused Boohoo of mismanaging the business and hit out at a £222m refinancing.

Ashley is now seeking a seat on the board along with restructuring specialist Mike Lennon. Ashley had initially wanted to be installed as chief executive, but Boohoo opted instead for Finley, who joined Boohoo in January 2022 as chief executive of Debenhams.

Boohoo urged shareholders to vote against the proposals at next month's annual general meeting.

It said the tycoon was "conflicted" and was not suitable" for the role, adding: "Frasers and Mike Ashley have history of exerting pressure on competitors and shareholders should be concerned about the possibility of Mike Ashley joining our board."