Boohoo Group PLC has found a way to improve its financial balance sheet.
Under the leadership of new CEO Dan Finley, the struggling fashion firm has extended the time in which it will pay certain vendors. Finley, named CEO on Oct. 31, succeeded John Lyttle, who resigned in mid-October. With payment terms extended, Boohoo will get a small bit of breathing room on its balance sheet.
Under the new terms, slated to go into effect at the end of January, British, Moroccan and Turkish manufacturers will get paid in 45 days instead of 30 days. U.K.-based importers are not subject to the new payment timelines, and will continue to receive payment within the 60-day timeline. Also exempt are a small group of suppliers. In addition, foreign suppliers will also have to wait an additional 15 days to get paid, with 90 days the targeted timeframe instead of 75.
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The last time the fast fashion firm extended its payment terms was December 2022. At that time, Boohoo pushed out payment for U.K.-based suppliers to 60 days from 30, and U.K. manufacturers had to wait 30 days instead of 14.
Boohoo has been struggling since the Covid-19 pandemic, hampered by problems in the supply chain, as well as high return rates and rising inflation. For the year ended February 2023, Boohoo’s losses swelled by 90.7 million pounds ($113.2 million), against a profit before taxes of 7.8 million pounds ($9.7 million) in the same year-ago period. But for the year ended February 2022, the 7.8-million pound profit before tax represented a 94-percent decline from 124.7 million pounds ($155.6 million) in February 2021.
The fashion platform saw the exit of several senior people in January 2024, including former CFO Shaun McCabe, trading director Sam Brocklebank, wholesale and product operations director Marie Laskowski, product director Claire Asher, and brand director Samantha Helligsø. The same year saw Boohoo putting up for sale its two-year-old U.K. manufacturing facility in Leicester on Thurmaston Lane. And more recently, the Barbie collaborator (Boohoo partnered with the fashion doll for a limited-edition capsule line in the lead-up to the movie “Barbie” in 2023) closed on the sale of its London headquarters in Soho in December for 49.5 million pounds ($61.2 million).
Overseas reports said the Debenhams owner, which acquired the bankrupt department store retailer in January 2021, will use part of the proceeds from the headquarters sale to pay down a 47-million pound ($58.1 million) term loan due in August 2025. Following the partial pay down, Boohoo will reportedly have a 125-million pound ($154.5 million) revolving credit facility considered sufficient for current operations.
But Boohoo still has work to do to revive its fortunes. Following the pandemic, shoppers pulled back on spending due to inflationary pressures. And when they did spend, they returned to shopping in stores, rather than buy online. In July, Boohoo said its online marketplace, dubbed Boohoo Brands, would be up and running at the end of August, with the platform featuring at least 150 brands across fashion, accessories, and beauty. Some designer brands on the platform include Michael Kors, Marc Jacobs and Ray-Ban. The hope was that its social commerce initiative called Boohoo Collective, which integrates thousands of social media influencers onto its website, and Boohoo Brands would bring in more revenue for the global e-tailer.
But whether Boohoo can drum up growth in sales remains a question mark, given the retail backdrop.
British Retail Consortium CEO Helen Dickinson on Tuesday described 2024 as a “challenging year marked by weak consumer confidence and difficult economic conditions.” She said that while sales growth is projected to average 1.2 percent in 2025, that’s below the projected shop price inflation of 1.8 percent.”
Dickinson said the likely outcome will be that sales volumes are likely to fall in 2025, while higher regulatory and tax burden on retailers will see them push up prices and cut investment in stores.
In addition, Boohoo has faced increased competition from other fast fashion rivals, such as Chinese firm Shein. To be sure, Shein has its own set of troubles as it tries to move forward on a London initial public offering, which includes slowing sales. Shein’s most recent hiccup came on Tuesday when its general counsel for Europe, Middle East and Africa refused to answer questions posed by a panel of British lawmakers over cotton sourcing, whether Shein believes there is forced labor in Xinjiang, as well as reported plans to list on the London Stock Exchange. Both Shein and rival Temu were summoned to the parliamentary hearing to answer questions over workers rights and labor practices.
Meanwhile, Boohoo on Wednesday said its co-founder and executive director Carol Kane acquired 320,943 common shares of the company’s stock, raising her stake to just over 20.6 million shares, or nearly 1.5 percent of the outstanding shares. Such a move is often viewed by investors as a vote of confidence in the future of the company.
Separately, Boohoo on Thursday published a letter to shareholders ahead of its scheduled general meeting on Jan. 21, 2025. The general meeting was called by the Boohoo’s board following a demand by Frasers Group plc that company co-founder and executive chairman Mahmud Kamani be removed as a director of the company. An independent committee was formed that determined that shareholders should “vote against” Frasers’ proposal at the upcoming meeting.
Frasers’ is controlled by Mike Ashley, who is best known for bottom-fishing when adding to his company’s portfolio. He made the first “strategic investment” in Boohoo in June 2023, and a few months later became the firm’s largest shareholder that October. He currently has a 28 percent majority stake in Boohoo.
Ashley apparently also had big plans for Boohoo, one that included an attempt at forcing himself into the CEO job when former chief executive John Lyttle resigned. Boohoo spurned those plans and installed Finley as CEO. After the CEO loss, Ashley began demanding that he and Mike Lennon be named directors of the company. Shareholders voted “no” to both proposals at a special meeting held last month.
