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Mike Ashley blasts ‘desperate’ Boohoo after CEO snub

The Frasers Group billionaire has attacked the fast-fashion retailer for promoting an insider rather than giving him the top job

William Turvill

Sunday November 03 2024, 12.01am, The Sunday Times

Companies

Frasers Group billionaire Mike Ashley has labelled Boohoo “desperate” after the struggling online retailer promoted an insider to chief executive rather than appointing him to the role.

Frasers, which owns brands including Sports Direct and Flannels, has built up a 27 per cent share in Boohoo. Last month, it published a letter attacking Boohoo’s management and calling for Ashley, its founder and majority shareholder, to be appointed as a replacement for John Lyttle, Boohoo’s outgoing chief executive.

Boohoo did not heed the call and on Friday it announced that Dan Finley, the boss of its Debenhams subsidiary, was being promoted to group chief executive.

In response, Ashley told The Sunday Times by email: “Independent shareholders be warned, desperate people do desperate things.”

It marks the latest chapter in an increasingly bitter feud between Ashley and Mahmud Kamani, the executive chair and co-founder of Boohoo. Their dispute was ignited when Boohoo bought Debenhams from under Ashley’s nose for £55 million in 2021.

Ashley’s demands put the board of Boohoo in a difficult position. Many in the industry questioned how the billionaire, who owns 73 per cent of Frasers, could feasibly have serve as the fast-fashion retailer’s chief executive given that Frasers owns 24 per cent of Boohoo’s rival Asos.

Since Frasers — now led by Ashley’s son-in-law, Michael Murray, 35 — started building its stake in Boohoo in June last year, it has been frustrated in its attempts to wield influence over Boohoo. It had previously suggested that Ashley could become an unpaid adviser to the firm, and it has been pushing — without success — to appoint a board member.

Finley, the new Boohoo chief executive, said he wanted to “collaborate” with all of the retailer’s shareholders and to “unlock value” in their investments.

Asked how he plans to work with Ashley and Frasers, Finley said: “I don’t know Mike Ashley personally. I know of him. I’m looking forward to engaging and working with all our stakeholders and shareholders.”

Ashley is Sports Direct. JD Sports was a sworn enemy. But he might well respect Finley because he knows how good an operator JD Sports are and to be fair Finley looks to have done a good job at Debenhams. If Ashley made a takeover I think Dan Finley would be a guy he would like to keep.

I think the problem facing anyone taking the CEO role is that he will not have free rein to make strategic and operational decisions. The only CEO that could override the Kamani family’s influence is Ashley, due to his shareholding.

I wonder if “Mike Ashley has been defeated”. I can’t imagine him packing his case and going home.

https://www.sharesmagazine.co.uk/news/shares/boohoo-defies-mike-ashley-and-names-debenhams-boss-dan-finley-new-ceo

As has been already pointed out it is strange that the Deputy Chairman is quoted and not the Chairman? There are 10 Board members, but I guess Lyttle no longer counts.

South Coast speculated that Umar would be appointed and I wouldn’t have been surprised if that was the original plan. I wonder if the Board wouldn’t go for it? Dan Finley looks like a deserving appointment. Jeffries were quoted as stating that their estimates for Debenhams GMV was £400m at this stage, so £800m is well ahead of expectations.

Not experts. And not predicting. Merely trying to work out the range of possible outcomes. Given the past 18 months of failed promises at least give us that. We are at last coming to the end game.

I think Ashley could do a lot with the company. And sell off the brands that he doesn't think fit Frasers.

Parsnip - God forbid.

He failed with Mulberry because the Ong family of Singapore had a controlling interest. The Chinese don't like to lose face and they think in decades, they are not worried about a short term underperformance at Mulberry.

But look at how Ashley approached it, a small premium £83m, followed by an offer of £111m - both rejected. He pays as little as possible. If it is not a bargain he walks away.

Parsnip - Ashley invested because he believes the company is undervalued. I think his initial view was that the Kamani's would turn things around and he would be able to triple his money or more. He wants control now, because he doesn't trust them. It's not about getting his money back, he doesn't think like a retail investor. He knows that he could do a lot with Debenhams, and he has a ton of retail space to offer them. Karen Millen would also fit nicely within Frasers. He could offload the online fashion brands to Shein, who he already has a relationship with, or attempt to push them onto ASOS. Ashley in control has several options.

It all depends on competition. If Ashley had some competition we could see higher bids. But if he is the only game in town expect a bid as low as he can get it. Look at the Mulberry bids, he would follow the same pattern.

I feel a bit sorry for Dan Finley, as he might find his appointment rescinded in a few weeks. He does appear to have done a good job with Debenhams.

We are in for an interesting couple of weeks.

Debenhams impressive. Karen Millen described by one analyst as a £300m brand.

I think a lot depends on whether there would be competition amongst bidders, but it does look to me if the upswing is little to do with Dan Finley. He appears to be a decent guy, but will still have to work under Kamani, so I wonder how much freedom he will get to be a CEO?

I agree that this sets off an enormous battle.

Hexam - According to the share market close report the performance today is down to the impact of the Budget on future interest rate cuts. Of course markets are impacted by many other factors, but the point being made below was that the Budget was the main driver. It doesn't appear to have been well received. It looks like we are back to tax and spend Labour. I personally thought Starmer would be closer to Blair, who I could live with ... but he's much further to the left. They banged on about growth in their manifesto so that led me to be a little more optimistic. I'm not anymore.

Appears that the Budget impacted stocks also?

(Alliance News) - Stock prices in London closed lower on Thursday, amid analyst speculation that the "sizeable fiscal loosening" announced by UK Chancellor Rachel Reeves in Wednesday's budget rules out two interest rate cuts this year.

The FTSE 100 index closed down 49.53 points, or 0.6%, at 8,110.10. The FTSE 250 ended down 305.16 points, or 1.5%, at 20,388.96, and the AIM All-Share closed down 1.0%, or 7.42 points, at 737.10.

The Cboe UK 100 ended down 0.6% at 813.47, the Cboe UK 250 closed down 1.7% at 17,963.17, and the Cboe Small Companies ended down 1.3% at 16,421.81.

"Previously market expectations were for the base rate to fall to 4.5% by the end of this year, and then to under 4% by the middle of 2025. But the inflationary nature of the measures announced in the Budget are forecast by the OBR to add 0.4% to CPI inflation in the next tax year, thereby putting pressure on the Bank of England to keep rates at higher levels for longer," said AJ Bell's Laith Khalaf.

But don’t take my word for it:

Capital Markets news: FT

“UK borrowing cost hits highest level this year as gilt sell off continues”

“The start of a new round of gilt market carnage?”

Politics UK

“The pound is falling - the biggest fall in more than 18 months”.

Nothing to do with the Budget, of course?

10 Year Government bonds peaking at 4.50% and Sterling falling over … not just shares that I’m talking about. But if it was really just a Budget for Growth you’d expect a positive market reaction. We got a relief rally on AIM, but the reality is that the cost of doing business and hiring employees is going up. Little cause for celebration.

Looks like the Budget is going down like a bucket of sick!

Magnum - we already know from the last update that the numbers will be poor, and they will have to explain the US Distribution Centre debacle, as well as the cost of shutting it down. As that is a monumental waste of resources I do not expect an upside surprise.