Billionaire Mike Ashley Accuses Fashion Retailer Boohoo Of ‘Blatant Hypocrisy’

Mike Ashley has accused the leadership of fast-fashion retailer Boohoo of engaging in “blatant hypocrisy” in their attempts to block the British billionaire from gaining two seats on the company’s board of directors.

In an open letter to shareholders issued on Thursday, Ashley’s Frasers Group said that Boohoo had “grossly exaggerated any perceived conflicts and governance concerns as a thinly-veiled excuse” to prevent Ashley and a restructuring expert, Mike Lennon, from joining the board.

Boohoo’s cofounder and Executive Vice Chairman Mahmud Kamani opposes the appointments because he fears they would “dilute his influence” over the board, the letter said.

If Ashley and Lennon fail in their bids to join Boohoo’s board, it “will only result in further value destruction for all shareholders,” Frasers warned in its letter.

Boohoo’s long-suffering shareholders are set to vote on the appointments on December 20. The retailer’s London-listed shares are down more than 91% since hitting their peak in June 2020, when it benefited from the surge in online shopping during the pandemic.

Boohoo, which owns the Debenhams, Karen Millen and PrettyLittleThing brands, is under growing pressure to reverse its declining revenues, while contending with increased competition from rivals such as the Chinese online retailer Shein.

Boohoo had reported that its gross merchandise value after returns had dropped 7% in the six months to the end of August to £1.2 billion ($1.5 billion). The company’s sales had declined across the U.K., the U.S. and internationally.

Dan Finley replaced John Lyttle as Boohoo’s CEO in November, as part of the struggling retailer’s efforts to turn around its fortunes. It also raised £222 million debt refinancing in October.

Boohoo was started by Kamani and Carol Kane in 2006 in Manchester as an online retailer that sells fashionable clothes for low prices. It was listed on the stock market in 2014.

Ashley has a history of building up stakes in struggling retailers before taking full control. His Frasers Group holds a 27% stake in Boohoo, as well as 24% of rival online retailer Asos, which Boohoo says is a conflict of interest.

Boohoo’s board has been joined by shareholder advisers Glass Lewis and Institutional Shareholder Services (ISS) in recommending that Boohoo shareholders vote against Ashley’s and Lennon’s appointments.

Boohoo has said Frasers seems to be intent on “disrupting” and “destabilizing” its operations to further its own commercial self-interest. “Frasers has prior history of this sort of corporate behavior,” Boohoo said in its statements.

Earlier, Ashley had sought to become Boohoo’s CEO, but the company’s board selected Finley, who had been running its Debenhams online store.

Ashley had battled with Boohoo for control of Debenhams after the 240-year-old department store had gone into administration in 2019.

Ashley has a net worth of $4.4 billion, according to Forbes Real-Time Billionaires List. He founded Sports Direct in 1982 and then expanded his empire through a long series of high-profile acquisitions, including House of Fraser and department store chain Flannels.

Ashley had stepped down as CEO of Frasers in 2022, giving the reins to his son-in-law, Michael Murray. The retail tycoon stepped down from Frasers board of directors later that same year.