- Boohoo: Mike Ashley and Mike Lennon have ‘irreconcilable’ conflicts of interest
- Frasers wants Mike Ashley to become the next chief executive of Boohoo Group
Boohoo is willing to offer Frasers Group a seat on its board after the Sports Direct owner made concessions on some governance matters.
However, the Manchester-based retailer said the ‘appropriate candidate’ cannot be Mike Ashley or his associate, Mike Lennon, who Frasers has been urging shareholders to appoint at an upcoming showdown.
Boohoo said the two men had ‘irreconcilable’ conflicts of interest and the board seat should be occupied by someone who can abide by the governance obligations it has demanded.
In a letter published on Thursday, Frasers said Ashley and Lennon were willing to abide by ‘all market-standard and customarily accepted’ governance protocols.
But the firm expressed opposition to a ‘small number of commitments’ requested by Boohoo, claiming they were legally baseless and not approved corporate practice.
Frasers added that Boohoo had ‘grossly exaggerated any perceived conflicts and governance matters’.
Not wanted: Boohoo is willing to offer Frasers Group a board seat, but the retailer said the ‘appropriate candidate’ cannot be Mike Ashley (pictured) or his associate, Mike Lennon
It also accused the Karen Millen owner’s chairman, Mahmud Kamani, of opposing Ashley and Lennon’s appointment to the board due to ‘fears this would dilute his influence’.
The letter came on the same day a second proxy advisor, Glass Lewis, urged Boohoo investors to vote against Ashley and Lennon becoming board members at a general meeting scheduled for 20 December.
Frasers believes the pair would deliver the necessary leadership to revitalise Boohoo, whose shares have plummeted by almost 90 per cent over the last five years.
Yet Tim Morris, chair of Boohoo, said the two men ‘are not appropriate candidates to join the board in any circumstances, whatever commitments are offered’.
He added: ‘Notwithstanding that, Frasers continues to refuse to agree to a number of the key protections that the board would require should an appropriate representative be nominated.
‘These are key issues which need to be addressed for the protection of all shareholders, and it is not for Frasers to pick and choose which commitments it will give.’
Boohoo enjoyed outsized growth during the early stages of the Covid-19 pandemic thanks to stringent curbs on physical stores driving Britons to buy their clothes online.
Trading subsequently slowed after restrictions were relaxed, and shoppers began purchasing their apparel in shops again.
Its sales then started declining amidst widespread cost-of-living pressures and rising competition from Chinese retailers Shein and Temu.
In the last financial year, Boohoo’s turnover plunged by over £300million to £1.5billion, while its pre-tax losses climbed by around three-quarters to £159.9million.
Boohoo Group shares were 1 per cent higher at 35.1p on Friday morning, while Frasers Group shares were 0.6 per cent lower at 620p.
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