Frasers Group, led by Sports Direct and Flannels owner Mike Ashley, has yet again increased its stake in the fast-fashion giant Boohoo. This, ultimately, will solidify its position as a significant shareholder.
Recent filings reveal that the group’s shareholding in Boohoo has surged 15.1% from the earlier 13.4%. Now this British retailer has acquired a substantial 191.8 million shares.
This latest development follows closely on the heels of Frasers Group’s recent leapfrogging of Boohoo’s co-founder, Mahmud Kamani, to become the largest individual shareholder in the fashion company. Notably, this move has fortified Frasers’ ownership of Boohoo, valued at approximately £56.6 million based on the market share price of 29.52p.
Frasers’ initial foray into Boohoo dates back to June, when it acquired a 5% stake. Thus citing the potential for synergies between Boohoo and its own brands, I Saw It First and Missguided, with aspirations for potential collaborations.
Previously, Mr. Kamani held the most extensive individual stake in Boohoo, standing at 12.9%, while jointly with his co-founder, Carol Kane, they held a combined 25% stake.
Boohoo’s recent struggles in the market have been evident, with its Boohoo shares plummeting by 43% over the past six months, attributed to sluggish sales amidst the ongoing cost-of-living crisis and the implementation of a comprehensive turnaround strategy.
The company issued a warning earlier this month, anticipating a potential decline of up to 17% in its full-year sales, primarily due to restrained consumer spending. This led Boohoo to reevaluate its sales strategies, focusing on more profitable segments within its brands as part of its larger restructuring efforts.
What was the Outcome of the Frasers Group Acquisition?
Consequently, the company has initiated several measures, including price reductions. This move aimed at luring financially strained consumers during the cost-of-living crisis, alongside aggressive cost-cutting initiatives as part of the ongoing overhaul.
Mike Ashley Frasers Group’s burgeoning interest in Boohoo aligns with its broader strategy of acquiring stakes in various retail titles, underscoring its robust expansion plans. Notably, the group has also amassed significant stakes in other prominent retailers, including electrical retailer Currys and online fashion groups AO World and Asos.
According to Frasers Group news, the majority-owned entity of the former Newcastle United chief, Mr. Ashley, reaffirmed earlier this year that strategic investments remain an integral aspect of its operational ethos.