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A second influential shareholder adviser has backed Boohoo in its battle with Mike Ashley’s Frasers, as the sportswear tycoon continues his pursuit of a board role at the UK fast-fashion retailer.
Glass Lewis on Wednesday urged Boohoo’s investors to vote against Ashley and another associate joining the board at a meeting on Friday next week. It comes after peer Institutional Shareholder Services made the same recommendations on Friday.
Glass Lewis’s advice is the latest twist in a stand-off between the two companies. The advisory group said that shareholders “would not be well served supporting the appointment . . . at this time”.
Frasers, which owns 28 per cent of Boohoo, believes the Aim-listed company has been mismanaged, after a 90 per cent fall in the value of its shares from their June 2020 peak. It has accused Boohoo’s top executives of presiding over a “catastrophic” debt refinancing and is seeking to install Ashley on the board, having so far unsuccessfully demanded that he be appointed as the retailer’s chief executive.
Boohoo, in turn, has accused Frasers of potential conflict of interest because of its stake in rival online retailer Asos, noting that both Frasers and Asos compete in similar markets to Boohoo — something that Glass Lewis and ISS have also raised as a concern.
Glass Lewis said in its report that although Ashley made certain commitments aimed at addressing these issues, such as agreeing not to share confidential information regarding Boohoo with Frasers, “we believe they fall short of the level of protections that are necessary to sufficiently guard against” this.
It acknowledged that Frasers “raised compelling points” that might justify further scrutiny of Boohoo but the company should have a chance to turn its fortunes around under new chief executive Dan Finley, an insider who replaced John Lyttle in November.
Boohoo said this week that Frasers appeared intent to “destabilise Boohoo and disrupt [the] board’s plans to unlock and maximise shareholder value”.
Frasers said on Wednesday that Ashley had “set out clearly” in an open letter on Sunday “his determination to work on behalf of all Boohoo shareholders and support Dan Finley to deliver on the opportunities to turn around the fortunes of the group and restore shareholder value”, and again urged shareholders to vote for the resolutions next week.
