Boohoo Group is under pressure from some shareholders to sell off brands acquired during its previous growth, such as Debenhams and Karen Millen. Reports from The Times indicate that there are even discussions about a potential breakup of the company. However, no official comments have been made by the involved parties.
The unnamed shareholders believe that the company could unlock more value by selling larger brands, including its core assets, PrettyLittleThing and Boohoo itself. This consideration comes as the company’s overall performance has declined in recent years.
The Times did not identify which shareholders are urging the Manchester-based company to take action. However, it noted that brands like Debenhams and Karen Millen are performing relatively well, prompting shareholders to see potential in selling them. There is also a belief that a complete breakup could provide significant returns to counteract the company’s plummeting share price.
Currently, Boohoo’s market valuation is less than £370 million. In contrast, the individual brands it owns could potentially be worth much more if sold separately. For example, rival ASOS recently sold a 75% stake in the Topshop and Topman brands for £135 million.
According to a source quoted by The Times, “The sum of the parts at Boohoo is greater than the current market cap. Therefore, if you want to realize that, you’ve got to do one thing, ultimately, which is to break it up.”
While a breakup is not guaranteed, co-founders Mahmud Kamani and Carol Kane are reportedly considering all options. A source close to Boohoo stated that Kamani is actively engaging with investor calls and is aligned with their concerns.
Any potential decision is likely to take time. The leadership team plans to closely monitor performance during the upcoming Christmas trading period before making final decisions.
In addition to Debenhams and Karen Millen, Boohoo owns several other brands, including Dorothy Perkins, Wallis, Burton, Coast, Oasis, and Warehouse, the latter of which has recently undergone a major relaunch.
Boohoo initially experienced steady growth and saw a significant boom during the pandemic as consumers turned to online shopping. However, its recent decline has led to dissatisfaction among major shareholders. On the other hand, the low share price has attracted new investors, including Frasers Group, which now holds a 26.2% stake. Mike Ashley, the controlling shareholder of Frasers, will likely seek to realize value from the business following this investment.
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