Boohoo is to raise £35m from shareholders amid a troubled turnaround
Boohoo Group has launched a £35m dividend as it tries to shore up its balance sheet and support its long-running turnaround, sending its shares down 10 per cent in early trading.
The Manchester-based retailer, which last year rebranded as Debenhams Group to reflect the label’s strong performance, said the equity raise would provide additional capital and help create what it described as a “very good structure”.
The placement, priced at 20p per share, has already received more than £24m of backing from existing shareholders, including co-founder Mahmud Kamani, chief executive Dan Finley and director Iain McDonald. The company said it will negotiate with institutional investors in the coming days to secure additional commitments.
Boohoo, founded in 2006 by Kamani and Carol Kane, became famous for selling low-cost, on-trend fashion directly to consumers online. It enjoyed multibillion-pound sales during the pandemic but has since struggled amid stiff competition from rivals such as Shein and Temu, as well as chain disputes and shareholder disputes.
Over the past year, the group’s shares have fallen nearly 22 per cent to just over 20p, reflecting concerns about its financial position and the speed of its recovery.
The company has confirmed that it is in advanced discussions with its lender to amend the loan agreements and increase financial flexibility. Any revised terms will be dependent on the successful completion of the capital increase.
Retail analyst Nick Bubb said the fundraising could reinforce investor concerns that Boohoo’s turnaround is proving more cash-intensive than previously expected. He noted that the company raised nearly £39m in November 2024 at 31p per share, highlighting the impact of shareholder dilution.
Boohoo said it expects adjusted earnings before interest, tax, depreciation and amortization (Ebitda) of around £50m for the year to 28 February, up from previous earnings of £45m. It is targeting a total debt to Ebitda of around two times by the 2027 financial year, falling below one by the end of that year.
Investment bank Peel Hunt has raised its full-year Ebitda forecast to £50m, suggesting the group could return to profitability for the first time since 2022.
Boohoo’s recovery efforts have been hampered by a dispute with Frasers Group, which owns 27 percent. The owner of Sports Direct, controlled by Mike Ashley, has repeatedly clashed with the Boohoo board, including over its strategy to rebrand the business.
Last year Frasers blocked efforts to officially rebrand holding company Debenhams Group Plc, despite a change in operating brand and ticker change to DEBS on the London Stock Exchange.
The dispute reflects a similar rift between Frasers and Asos, in which it also has a major stake.
For Boohoo, the latest earnings call underscores the weakness of its turnaround as it battles tough online competition, headwinds and investor skepticism in a market saturated by fast fashion.
