Boohoo’s chief executive is stepping down as the online fashion retailer launches a strategic review of its brands, which include Debenhams, Karen Millen and PrettyLittleThing, that could result in a breakup of the company.
Shares in Boohoo fell 7% on Friday as investors reacted to news of the surprise departure of John Lyttle, who joined from Primark in 2019 and has agreed to remain in post until a successor is found.
The company, which has cut jobs amid widening losses and falling sales in the face of competition from rivals such as the Chinese online fast fashion retailer Shein, also said it had agreed a new £222m debt facility with its bankers.
Announcing the business review on Friday, the company said: “Given the transformation of the group, the board of directors of Boohoo Group have decided to undertake a review of options for each division to unlock and maximise shareholder value.
“The board believes that the group remains fundamentally undervalued following the developments of recent years, which have created a business with five core brands, addressing a diverse global customer base.”
Boohoo has a market value of £404m and its share price has slumped by almost 90% over the past five years.
“The board is focused on ensuring it takes the right steps to drive Boohoo Group in the interest of all its stakeholders,” said Mahmud Kamani, its executive chair and co-founder.
“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 maximising shareholder value,” he added.
Russ Mould, the investment director at the broker AJ Bell, said: “The starting gun has been fired on the break-up of Boohoo … Selling Karen Millen and Debenhams is the obvious starting point, leaving Boohoo with a sharper focus on a younger target market.”
Boohoo also provided a trading update showing that adjusted profits fell by a third to £21m in the six months to the end of August, while revenues fell 15% to £620m.
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The UK, which accounts for the lion’s share of Boohoo’s business, reported a 2% fall in sales. The US slumped by 18% and the rest of the world fell by 21%.
“The likes of Shein and Temu are making this a fiercely competitive market, and it’s taking a toll,” said Derren Nathan, the head of equity research at the analysts Hargreaves Lansdown.
“Chief executive John Lyttle is to step down after a five-year tenure. With the shares down nearly 90% in that period, few investors will be crying over his departure. The group is exploring options to maximise shareholder value, but any successor will need to lean heavily on the tiller from day one to turn this ship around.”