The CEO of UK-based online fast-fashion house Boohoo, John Lyttle, is stepping aside. This coincides with a strategic assessment of the company, whose outcome could lead to its potential fragmentation. The company, which has Debenhams, Karen Millen, and PrettyLittleThing in its brand portfolio, asserts it’s significantly undervalued and that there are opportunities to drive value for shareholders.
Boohoo shares dipped by 9% in early London trading, and this year, the stock has seen about a quarter of its value erode. This follows Boohoo’s report of a significant reduction in first-half-year revenue, dropping from £729 million the prior year to £620 million this term. To finance its ensuing journey, the firm has arranged a new debt facility amounting to £222 million.
Lyttle’s tenure at Boohoo, beginning five years ago after leaving rival Primark, has been marked by turbulence. Prior to the onset of the Covid-19 pandemic, the company grappled with a scandal involving minimum-wage violations and safety concerns at its supplier factories in Leicester. Despite an independent review exonerating the firm from direct involvement, it exposed Boohoo’s emphasis on profits and growth at the expense of labour rights.
The Covid pandemic also presented challenges, with an initial boost in online sales due to lockdowns, followed by a significant downturn as physical stores reopened. The brand’s expansion into the US market was also hit by steep shipping costs. Earlier in the year, Boohoo was forced to abandon a profitable bonus scheme due to a revolt from shareholders over expanding losses.
Despite these setbacks, Boohoo announced it had enacted a series of strategic steps in the past year and a half, aimed at enhancing operational effectiveness and making cost reductions. These initiatives alongside progress made in revamping the Debenhams and Karen Millen brands, will form a substantial part of the strategic review intended to optimise shareholder value.
However, Andrew Wade, an analyst at Jefferies, advised caution concerning Boohoo’s debt refinancing. The package includes a £100 million term loan, repayable as soon as August 2025, potentially constraining the company’s financial agility.