Boohoo launches strategic review as CEO steps down
By Abigail Townsend
Date: Friday 18 Oct 2024
(Sharecast News) - The boss of Boohoo Group is to step down, the struggling retailer announced on Friday, as it posted a slump in half-year sales and launched a review of the business that could potentially see it broken up.
The online fast fashion brand, which also owns Debenhams, PrettyLittleThing and Karen Millen, said the business was "fundamentally undervalued". It was therefore launching a review of options for each division.
It continued: "The board believes there is potential to unlock shareholder value and is exploring options to deliver on this.
"The board remains committed to open and transparent engagement with all of its stakeholders and will communicate further as appropriate."
Boohoo also confirmed that John Lyttle, who has been with firm for five years, had resigned.
Like most online retailers, Boohoo boomed during the pandemic. But it has since struggled, rocked by stiff competition from rival online firms such as Shein and the reopening of high streets.
It has also struggled to gain traction at its US business. Last month, it announced the closure of its Pennsylvania distribution centre only a year after it had opened.
Updating on trading, Boohoo said revenues in the six months to 31 August had tumbled 15%, to £620m, while adjusted earnings before interest, tax, depreciation and amortisation had lost £10m at £21m.
The total value of goods sold fell 7%.
Chair and co-founder Mahmud Kamani said: "The business has evolved over the last few years and has an offer that is much wider than our original focus on young fashion. The time is now right to consider options with regard to corporate structure."
Lyttle said: "I believe there is huge potential in this business and will continue to work with the board to drive value for all shareholders while a successor is found."
In May, Boohoo it fell foul of investors after announcing bonuses of £1m each for its three most senior executives - Lyttle, Kamani and co-founder Carol Kane - despite sales, profits and cashflow targets being missed.
The company eventually said it said had opted not to implement the incentive plan following talks with shareholders.
As at 0930 BST, the Aim-listed stock was down 2%, having slumped 9% in early trading. Boohoo has lost 16% so far this year.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: "Boohoo is one retailer that's not in growth territory.
"Lyttle is to step down after a five-year tenure. With the shares down nearly 90% in that period, few investors will be crying over his departure. The group's exploring options to maximise shareholder value, but any successor will need to lean heavily on the tiller from day one to turn this ship around."
Boohoo is due to post interim results in early November.
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