Frasers Group Plc did it again, raising its stake in Boohoo to 13.4 percent.
According to a Frasers regulatory statement filed Tuesday, the Flannels parent it increased its stake in British fashion purveyor Boohoo. It had a 10.4 percent stake in September after it purchased 170.4 million shares. The filing listed Frasers owner Mike Ashley as the “ultimate controlling person” of the voting rights on the shares of Boohoo, which is led by CEO Michael Murray.
Frasers made its first “strategic investment” in Boohoo in June and raised it a month later to 6.8 percent from 5 percent.
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So, why is Frasers keen on a Boohoo buying spree?
A possible Boohoo takeover down the road wouldn’t be out of the realm of possibility, given Frasers’ track record. But there are other reasons as well.
Frasers cited the Kourtney Kardashian collaborator‘s popularity with young women as a factor behind the financial move. And it noted that Boohoo offers “synergies” with other brands Frasers already owns, namely Missguided and I Saw It First. The two acquisitions moved Frasers deeper into the world of digital fast fashion, causing some to speculate about whether it was building a fast-fashion empire.
Boohoo on Tuesday reported a first-half loss of 9.1 million pounds ($11 million) on a 17.4 percent revenue decline to 729.1 million pounds ($880.5 million). It also lowered its revenue guidance for the Fiscal Year ending Feb. 28, 2024. The fast-fashion e-tailer cited rising costs and declining consumer demand as reasons for its lackluster results. Investors weren’t happy and sent Boohoo shares tumbling 10 percent after the earnings report. Forever on the hunt for a good deal, the decline in stock price seemed to give Ashley’s Frasers the opportunity to pick up more shares on the cheap.
The Manchester-based company has also been taking strategic stakes in other companies. One is in Boohoo competitor Asos, in which Frasers now owns a 10.62 percent stake as of September that’s up from 10.58 percent in June. Frasers had a 5 percent holding in October 2022.
Boohoo and Asos are not the only companies where Frasers has taken investment positions. It has a history of taking stakes in other businesses too, including Mulberry. It’a a “supportive stakeholder” in Hugo Boss, too.
