Boohoo Group PLC on Wednesday called on shareholders for £39.3 million to bolster its balance sheet as it seeks to fend off the unwanted attentions of shareholder Frasers Group PLC.
The online retailer intends to use the funds from the placing, priced at 31 pence per share, to reduce debt. Shares in Boohoo closed down 0.1% at 29.96p each in London on Wednesday.
The retailer also issued a circular urging investors to vote against the resolution proposed by 27% shareholder, Frasers Group to install Mike Ashley as chief executive.
Boohoo said it has a ‘credible plan to unlock and maximise value’, and thinks Frasers and Ashley, the 73% shareholder and controller of Frasers, are acting in their own self-interest.
Boohoo said it considers Frasers to be a competitor of all of its core brands across its own brands and investments.
‘The board is not deliberately seeking confrontation with Frasers, but will at all times act in the best interests of the company and all shareholders,’ it said in a statement.
Boohoo said that in Dan Finley, the group has a strong and dynamic chief executive who is one of the ‘outstanding leaders in a new generation of digital retailers’.
In addition, Boohoo confirmed half-year numbers which had been pre-released.
Revenue fell 15% to £619.8 million in the six months to August 31 from £729.1 million a year prior.
The adjusted pretax loss widened to £27.4 million from £9.1 million, while the gross margin declined to 50.7% from 53.4%.
Finley said he believes that the group remains ‘fundamentally undervalued’.
‘We have a significant opportunity to create substantial value for all shareholders through our 5 core brands.’
He highlighted progress at Debenhams and Karen Millen but noted Youth Brands have seen a gross merchandise volume pre returns sales decline.
‘We continue to be cost focused and have taken actions to improve profitability in our Youth Brands such as closing the US distribution centre,’ he said.
In addition to the ongoing strategic review, Boohoo said it also continues to review options for its non-core, non-strategic assets, including the Soho property.
For the second half of the financial year, Boohoo expects a higher GMV and a stronger adjusted earnings performance, compared to the first half, despite further investment into the brands to unlock shareholder value.
It sees strong continued Marketplace growth, ongoing headwinds in Youth Brands but benefits from cost actions to reduce cost base year on year.
In the medium term, Boohoo is targetting £1.5 billion plus GMV pre returns at Debenhams with double digit Ebitda margin.
At Youth Brands, the target is £1.8 billion GMV pre returns and a 6% to 8% Ebitda margin target.
At Karen Millen, Boohoo is aiming for double digit Ebitda margins.
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