He was the flashy fashion mogul of Manchester – now Mahmud Kamani faces a battle for Boohoo

The most recent skirmish came in May when Boohoo backtracked on a controversial payout after a backlash from “certain shareholders”.

The company wanted to hand Mahmud, Kane and chief executive John Lyttle £1m each in bonuses despite missing targets on sales, profits and cash-flow as well as the environment and IT improvements. Boohoo had failed to consult investors prior to unveiling it.

“How did shareholders wake up in the morning and find out a bonus was being paid and a new value creation plan was being structured? Then three days later it’s rolled back and the chair of the remuneration committee is still there? I’ve never seen anything like that before. I just thought, f—, this is mental,” one investor said.

The company was also forced to defend a decision to buy Umar out of his women’s fashion brand Pretty Little Thing in 2020. The deal was worth £330m with the young entrepreneur receiving £162m in cash, £108m worth of Boohoo stock, and the potential to earn a further £54m if Boohoo’s share price hit a certain level over the intervening months. Boohoo had paid just £3.3m for 66pc of the business only three years earlier.

It must contend too with the growing influence of several hedge funds, who have been steadily building short bets against Boohoo in an attempt to capitalise on its recent misfortune. Four funds have disclosed positions against 4.3pc of the shares.

A turnaround looks a tall order even for an entrepreneur of Mahmud’s experience.

There are signs of internal strife that stretch well beyond discontent over last month’s trip to Turkey.

Finance chief Sean McCabe stepped down with immediate effect in January after just 14 months in post, at the same time as retail publication Drapers reported that a raft of senior staff including trading director Sam Brocklebank were also departing. 

Meanwhile, Andrew Reaney, who was brought in as “responsible sourcing director” after the company was rocked by accusations of modern slavery conditions in its Leicester factories in 2020 has recently stepped down.

Boohoo’s most recent financial figures – released in May – made for grim reading. Annual losses had widened to £160m in the 12 months to February from £90m the year before, while turnover plunged 17pc to £1.5bn on the back of a worrying exodus of customers – so-called ‘active users’ declined 11pc. 

As trading deteriorates, the City is growing increasingly nervous about Boohoo’s spiralling debt levels. It swung from a positive cash position of £6m to £95m of net debt in the most recent financial year – equivalent to a net cash outflow of £101m, though company insiders point out it had £200m of cash on its balance sheet as of February.

Nevertheless, questions are now being asked about the ability of Boohoo to meet several looming debt repayments. The company has a £325m unsecured overdraft, which it has drawn down fully and must be repaid in two instalments over the next 18 months. 

A £75m slice must be repaid next year after banks refused Boohoo’s request for an extension. The remaining £250m is due in 2026, compounding Boohoo’s already stretched finances further, unless it can hammer out a refinancing deal.

Boohoo’s creditors have drafted in debt specialists from FTI Consulting, while the company is working with experts at merchant bank Rothschild as the two sides face each other in crunch talks. The appointment of advisers is usually a tacit admission from those involved that they expect negotiations to be tense.

Analysts at Shore Capital describe the news as “concerning”. It “signals perhaps a weaker financial constitution,” the broker said. However, if the discussions prove successful, it “could provide greater reassurance around liquidity and finance costs,” it added.

It is a far cry from the heady days of the pandemic boom when Boohoo was the toast of the City. With its share price hitting a record high of more than 400p, Boohoo set about snapping up stricken brands Debenhams and Warehouse.

It also swooped on Dorothy Perkins, Wallis and Burton, completing the break-up of Sir Philip Green’s Arcadia and solidifying a longstanding relationship between Mahmud and the fallen retail tycoon that endures today. Associates say the pair still speak regularly.

Some observers believe the board has been too quick to blame the tough economic backdrop for its struggles when there are other more pressing factors. At the full-year stage, chief executive John Lyttle blamed Boohoo’s problems on “difficult market conditions’. It has been hit by “high levels of inflation and weakened consumer demand”, he said.

A bigger problem for Boohoo, rivals say, is the extraordinary rise of China’s Shein, which is able to undercut the competition through cheap factory labour and materials, and by avoiding import duty into Europe on its parcels.