LONDON — Boohoo Group is waving goodbye to its chief executive officer John Lyttle and could sell a number of the high-profile brands it acquired over the past few years to shore up its plummeting share price.
The online fast fashion retailer said Friday that in an effort to “maximize” shareholder value it was placing its three main divisions — Debenhams, Karen Millen and Young Fashion Brands, which comprises Boohoo and other youth-focused brands — under review.
Some of those businesses were bought out of administration at a time when interest rates were low, and online sales were riding high. But macroeconomic dynamics have changed since the end of the pandemic, and businesses that once looked like a bargain now require more resources to run.
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To wit, Boohoo Group has secured a 222 million pound debt refinancing facility, amid a 15 percent decline in revenue to 620 million pounds and a 7 percent drop in gross merchandise value to 802 million pounds in the fiscal first half ended Aug. 31.
The company said the performance of its “youth brands” has remained impacted by the external environment, although the group continues to see considerable GMV growth for Debenhams‘ external marketplace, with an additional 5,000 brands signed within the period.
On Friday, following the announcement, the share price fell more than 7 percent to 29.53 pence. In the year to date the group’s share price has dropped nearly 22 percent.
Mahmud Kamani, group executive chairman, said the board is “focused on ensuring it takes the right steps to drive Boohoo Group in the interest of all its stakeholders. 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, with the aim of maximizing shareholder value.”
Kamani also thanked Lyttle, who had served as CEO for five years. Lyttle said “there is huge potential in this business, and I will continue to work with the board to drive value for all shareholders while a successor is found.”
The group also touted its success in building the various brands, which have become a drag on growth over the past 18 months, for a variety of reasons.
Boohoo’s Gen Z core customer base is shopping differently. They’re more aware of sustainability, making more considered purchases, and focusing less on fashion, and more on the classics.
Boohoo is up against competitors such as Shein and Temu, which are well-funded experts in supply chain, logistics and speedy manufacturing. The group is also competing with Primark, which is expanding internationally and sticking to its brick-and-mortar strategy.
The group touted the brands that are under review, saying Debenhams has been repositioned “as a leading, British online department store. It is fast-growing and profitable, with a capital-light and highly cash generative model, and five million active customers. It is a marketplace with more than 10,000 brands across fashion, home and beauty.”
It added that Boohoo’s online retail brands PrettyLittleThing, Boohoo and BoohooMan collectively serve more than 14 million customers with GMV in excess of 1 billion pounds. It said those brands are backed “by a state-of-the-art, fully-automated” distribution center.
The group described Karen Millen as a “digital-first, premium global brand. The future growth potential is significant through maximizing international, licensing and franchising opportunities and adoption of a marketplace strategy.”
In an effort to drive business, Boohoo said it has already executed on a series of “decisive and robust strategic initiatives to drive operational efficiencies and optimize the cost base over the last 18 months.”
It also said that “substantial strategic progress” has been made, including the reinvigoration of the Debenhams and Karen Millen brands, and the Debenhams marketplace strategy.
Like other on- and offline fast-fashion retailers, Boohoo has been trying to move on from a series of sweatshop scandals.
As reported in July 2020, the company lost 23 percent of its value in one day, equating to $1.35 billion in losses, after reports of “modern slavery” were unveiled in its Leicester, England supply chain. Since then, the company has instituted its Agenda for Change program, instituting a number of improvements.
It has published its full 1,100 suppliers online (excluding subcontractors), instilled a whistleblower policy and linked executive bonuses to ESG performance, among other requests per government agencies including the U.K. Environmental Audit Committee. In 2022 the company also named its first sustainability ambassador, Kourtney Kardashian.