- Shareholder opposition to bonuses
- Losses of £160 million last year
- Shein lining up IPO
Online fast-fashion retailer Boohoo (BOO:AIM) faces a revolt from shareholders over its controversial decision to lavish bonuses on senior executives despite racking up £160 million worth of losses last year.
The scene is set for fireworks at Boohoo’s AGM (annual general meeting) on 20 June, where several shareholders plan to vote against proposals to reward CEO John Lyttle and co-founders Mahmud Kamani and Carol Kane with £1 million apiece in bonuses.
The controversial awards come against a backdrop of falling revenues and fierce competition from fast-fashion rival Shein, which is lining up a London IPO (initial public offering).
MAJOR SHAREHOLDER ‘FURIOUS’
One top five Boohoo shareholder told The Times they were ‘furious’ about the bonuses after the hard-pressed fashion group’s revenue plunged 17% to £1.4 billion in the year to February 2024 amid weak consumer demand and cut-throat competition.
The embattled apparel purveyor’s statutory loss before tax widened from £90.7 million to £159.9 million and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) fell 7% to £58.6 million, towards the bottom end of the £58 million to £70 million guidance range and below the previous year’s £63.3 million figure.
Earlier this month Boohoo, whose brands include PrettyLittleThing, Karen Millen and Debenhams besides the eponymous label, outlined a ‘refreshed approach’ to incentivising its executive directors and senior management in order to ‘ensure that the key drivers and talent are appropriately motivated and remain in place to deliver future growth’.
However, a number of unhappy shareholders are also planning to give its long-term incentive plan the thumbs down at the AGM.
THE EXPERT’S VIEW
Dan Coatsworth, investment analyst at AJ Bell, said ‘the stage is set for a sizeable revolt at the AGM in less than a month’s time. Boohoo never seems to do itself any favours from a governance perspective. The fast-fashion company has faced criticism over its supply chain and greenwashing claims during a scandal-hit stay on the stock market.’
Shares in Boohoo, which have fallen 85% over a turbulent past five years, ticked up 2% to 35.2p as trading resumed after the long Bank Holiday weekend.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
