Boohoo Group has initiated a fundraising drive amidst growing financial challenges, reporting a substantial loss and seeking ways to maximise shareholder value.
- The company announced the issuance of up to 19.3 million new shares as part of its fundraising strategy.
- Recent financial results showed a significant increase in pre-tax losses, rising to £147.3 million, alongside a 15% drop in revenue.
- Despite the overall downturn, brands like Debenhams and Karen Millen have shown growth, suggesting potential opportunities.
- Tensions have arisen with a major shareholder, Frasers Group, adding to the complexity of Boohoo’s current situation.
Boohoo Group has commenced a significant fundraising initiative, announcing the placement of up to 19,354,838 new ordinary shares, each valued at £0.01. This step aims to offer strategic flexibility to enhance shareholder value. Since declaring this initiative on 13 November, the company has effectively completed the ABB process, raising £33.3 million out of the targeted £39.3 million.
In the latest financial report, Boohoo detailed a troubling increase in pre-tax losses, now at £147.3 million compared to £36.6 million for the same period last year. This comes on the back of a 15% decrease in revenue, bringing it down to £619.8 million. Additionally, adjusted EBITDA showed a decline of 10.5%, standing at £20.8 million, and gross profit fell by 19.2% to £314.4 million.
Nevertheless, some Boohoo brands are experiencing growth. Notably, the gross merchandise value for Karen Millen increased by 2.3% to reach £78.3 million. More impressively, Debenhams saw a 31.2% increase, reaching £265.5 million. The new CEO, Dan Finley, expressed optimism, stating “the group remains fundamentally undervalued” and highlighted the achievements in the Debenhams marketplace and beauty sectors.
Amidst these developments, Boohoo has been entangled in a conflict with Frasers Group, a major shareholder. Frasers has been accused of pursuing its interests at the expense of other shareholders, prompting Boohoo to issue a circular recommending opposition to proposals by Frasers at an upcoming general meeting. The discord has been further exacerbated by open letters from Mike Ashley, criticising Boohoo’s financial strategy and suggesting a leadership change.
Despite these challenges, Boohoo’s management is focused on overcoming market volatility and achieving their objectives to maximise shareholder returns.
Boohoo Group is navigating a challenging financial landscape with strategic measures to bolster shareholder value amidst growing losses.
