Boohoo paves way for break-up after boss steps down

Boohoo fired the ‘starting gun’ on the break-up of the company as its boss quit.

The online fashion group announced a review that throws into question the future of its Karen Millen and Debenhams brands, which could be spun off or sold in a bid to boost the flagging share price.

Chief executive John Lyttle revealed he will step down after five years running Boohoo, whose brands also include Oasis, Coast, Warehouse, Nasty Gal and Pretty Little Thing.

Analysts said a break-up of the empire was on the cards.

The business was founded in Manchester in 2006 by Mahmud Kamani, 60, and Carol Kane, 58, and exploded in popularity thanks to its appeal to trendy young shoppers. When shares peaked in July 2020 during Covid-19 lockdowns, Boohoo was valued at over £5billion.

But the stock has dived in recent years and yesterday closed down 8.4 per cent, or 2.68p, to 29.2p, valuing it at just £370m.

Boohoo said it thinks it is ‘fundamentally undervalued.’

Sales and profits have suffered in the face of fierce competition from rivals including Shein.

And brick-and-mortar shops – including Next and Marks & Spencer – have enticed customers away from the internet after the world opened up when lockdowns lifted.

Chairman Kamani said: ‘The business has evolved over the last few years and has an offer that is much wider than our original focus on young fashion.

‘The time is now right to consider options with regard to corporate structure, with the aim of maximising shareholder value.’

Over the last few years, Boohoo has bought brands including Dorothy Perkins, Wallis and Burton from Sir Philip Green’s collapsed empire. It also picked up Karen Millen for £18.2m in 2019 and failed department store chain Debenhams for £55m in 2021.

Analysts said it would make sense to sell these two brands to be able to focus on a remaining online retailers, including Pretty Little Thing and Nasty Gal.

Rivals who may throw their hat into the ring include Frasers Group, which owns around 26 per cent of Boohoo, and Next. Russ Mould, investment director at broker AJ Bell, said: ‘The starting gun has been fired on the break-up of Boohoo. Selling Karen Millen and Debenhams is the obvious starting point, leaving Boohoo with a sharper focus on a younger target market.’

Boohoo said sales tumbled 15 per cent to £620m in the six months to August 31. Profits slumped to £21m from £31m in the same period the previous year.

Boohoo has also signed a £222m debt financing deal, which will pay for the next stages of its turnaround plan.

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