Boohoo raises £39m through fundraiser as half-year losses triple
It comes as newly appointed CEO Dan Finley said that the company is ‘significantly undervalued’, amid the launch of a new strategic review of the group
Boohoo has raised £39.3m through a “significantly oversubscribed” fundraising launch with shareholders after its losses tripled in its half-year results. In the half-year ended 31 August 2024, adjusted pre-tax losses widened to £27.4m, up from a loss of £9.1m the prior year. Revenues also fell by 15% from £729.1m to £619.8m.
It comes as newly appointed CEO Dan Finley said that the company is “significantly undervalued” amid the launch of a new strategic review of the group.
In its latest results, the group said it took “decisive action” to close its US distribution centre to focus on profitability, causing an EBITDA Margin impact of 120bps. However, its closure will bring savings in the second half of the year, according to Boohoo.
Over the period, Debenhams Marketplace and Beauty saw “significant” growth of 170% against the prior year, with the group claiming the expansion of its beauty offering puts it in a “solid position” ahead of the Black Friday and Christmas trading period.
While Karen Millen saw GMV pre-returns increase by 2.3% to £78.3m, Youth Brands saw a GMV pre-returns decrease of 15.9% to £833.1m, “reflecting difficult market conditions, impacted by weak consumer environment”.
Commenting on the results, Finley said: “I believe that the group remains fundamentally undervalued. We have a significant opportunity to create substantial value for all shareholders through our five core brands.
“I’ve been with the group for nearly three years, joining as CEO of Debenhams in January 2022 transforming it into a highly profitable, capital light marketplace business. I’m excited at the opportunities I see ahead for the entire group. We have brilliant brands and great people, underpinned by best-in-class infrastructure. We have had huge success with Debenhams, and I look forward to extending that across the entire group.”
He added: “There have been challenges and we continue to operate within a volatile market. Our Youth Brands have seen a GMV pre returns sales decline. These brands do still have significant scale, a loyal customer base, serving more than 14 million combined active customers with GMV more than £1.8bn in FY24 and are supported by our state-of-the-art automated infrastructure. We continue to be cost focused and have taken actions to improve profitability in our Youth Brands such as closing the US distribution centre.”
Commenting on the fundraise, Finley said: “We are pleased with the level of support from our existing shareholders for the business in its next stage of growth.”
Earlier this week, it was reported that Boohoo was excluding a meeting with majority shareholder Frasers Group amid an ongoing row between the two companies over its governance.
According to The Times, Finley was understood to be meeting some of the company’s biggest investors, yet no meetings were scheduled with anyone from Frasers Group.
Boohoo and Frasers, which owns 27% of the company, declined to comment to Retail Sector on the latest development.
Boohoo last week said that it “remains committed to open and transparent engagement with all of its shareholders” however.
In its same response, it raised “concerns” over Frasers’ behaviour in a new open letter to the Mike Ashley-owned company, as the row over Frasers’ involvement in Boohoo continued, with the retailer now accusing Frasers of “commercial self-interest”.
Its latest response comes as Frasers sought stronger involvement in Boohoo’s strategic review, with Boohoo calling the move “inappropriate” due to the fact Frasers is a trade competitor and not an independent shareholder in the online retailer.
