Frasers Group Renews Attack on Boohoo, Alleging Undisclosed Payments to Co-founder’s Son
The ongoing battle between retail giants Frasers Group and Boohoo has taken a new turn, with Frasers publicly accusing Boohoo of making undisclosed multi-million-pound payments to the son of its co-founder. In an open letter released Wednesday, Frasers, owned by billionaire Mike Ashley, claimed that Umar Kamani, son of Boohoo co-founder Mahmud Kamani, is receiving over £2 million annually for "consultancy services" provided to PrettyLittleThing (PLT), a Boohoo subsidiary. Umar Kamani founded PLT and subsequently sold it to Boohoo in 2020 for approximately £270 million. Frasers asserts that these payments, allegedly made to a Dubai bank account, have not been properly disclosed despite repeated requests for information.
The letter highlights the substantial sum involved and the potential conflict of interest arising from this arrangement. Frasers expresses surprise that such a significant remuneration package has not been transparently disclosed to shareholders, given Umar Kamani’s previous relationship with PLT and his father’s position within Boohoo. The letter calls on Boohoo to urgently provide full details of the consultancy agreement, raising questions about corporate governance and transparency within the fast-fashion retailer.
This latest salvo from Frasers Group comes just a day after Boohoo shareholders rejected a proposal to remove Mahmud Kamani from the board. Frasers, which owns a 27% stake in Boohoo, has been engaged in a protracted campaign to overhaul the retailer’s leadership, citing concerns about "gross mismanagement" and "continued value destruction." The shareholder vote, which saw 63% oppose Mahmud Kamani’s removal, represents a setback for Frasers and its efforts to reshape Boohoo’s board. Boohoo has urged Frasers to cease its disruptive actions, claiming they are not in the best interests of shareholders.
The public clash between these two retail titans has been escalating for months. Frasers has previously attempted to appoint its own representatives, including Mike Ashley and restructuring specialist Mike Lennon, to Boohoo’s board, but these efforts were also rebuffed by shareholders. Boohoo argues that Frasers is pursuing its own commercial interests, drawing parallels to Frasers’ previous involvement with Studio Retail Group, where it exerted pressure on the management team before ultimately acquiring the company out of administration.
Boohoo, which also owns brands like Debenhams and Karen Millen, experienced significant growth during the pandemic as online shopping surged. However, the company has faced increasing competition from other fast-fashion rivals like Shein and Temu, impacting its sales and market value. Boohoo’s stock price has plummeted by 90% since its peak in June 2020, adding fuel to Frasers’ criticisms of the company’s management.
This latest accusation regarding undisclosed payments to Umar Kamani further complicates the already strained relationship between Frasers and Boohoo. The demand for transparency and the allegations of potential conflicts of interest raise serious questions about Boohoo’s corporate governance practices. The ongoing dispute underscores the challenges facing the fast-fashion industry, with increasing competition and scrutiny over business practices. The outcome of this conflict remains uncertain, but it will likely have significant implications for both companies and the wider retail landscape.
The public nature of this dispute, played out through open letters and shareholder meetings, offers a rare glimpse into the inner workings of corporate power struggles. Frasers’ persistent challenges to Boohoo’s leadership and strategy raise questions about the direction of the fast-fashion retailer. While Boohoo defends its actions and accuses Frasers of self-serving motives, the accusations of undisclosed payments and potential conflicts of interest demand further investigation and clarification. The ongoing saga highlights the importance of transparency and accountability in corporate governance, particularly within a dynamic and competitive industry like fast fashion. As both companies navigate this complex situation, the ultimate impact on their respective businesses and the broader retail market remains to be seen. The outcome will undoubtedly be closely watched by investors, industry analysts, and consumers alike.
