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Shares in Debenhams and Dorothy Perkins owner Boohoo are down more than 80% over five years / Image source: Boohoo
  • Biggest shareholder ups stake to 17.2%
  • Ashley and Murray see a bargain
  • Shein files to go public

Boohoo’s (BOO:AIM) shares were bid up 4% to 35p on the revelation Mike Ashley-controlled conglomerate Frasers (FRAS) has raised its stake in the fast fashion retailer above 17% for the first time.

Frasers’ move comes at a crucial time for embattled Boohoo.

Fierce competitor competitor Shein is growing ever more formidable and long-suffering shareholders may be hoping Ashley puts Boohoo out of its misery by buying the business outright.

The meteoric rise of aggressive e-commerce colossus Shein, which is targeting further growth in the UK, is one of the key reasons why Boohoo and rival ASOS (ASC) have been struggling.

Singapore-based Shein has confidentially filed to go public in the US in what is set to be one of the biggest initial public offerings of recent years and float proceeds will only serve to strengthen its financial muscle.

BARGAIN HUNT

Sports Direct-to-House of Fraser owner Frasers has upped its stake in Boohoo from 16.5% to 17.2%, with billionaire retail tycoon Ashley and son-in-law Michael Murray, who occupies the chief executive hot seat at Frasers, clearly spying a bargain.

Shares in Manchester-headquartered Boohoo are down more than 80% over five years, and have plunged 20% over the past year.

Cost-of-living pressures are squeezing the disposable incomes of youthful fashionistas and investors are unsure over the chances of success of Boohoo’s turnaround plan.

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On 3 October, the PrettyLittleThing, Debenhams and Dorothy Perkins brand owner disappointed the market by downgrading its full-year 2024 sales and profit forecasts.

Frasers’ move follows earlier stakebuilding during October, when the Shirebrook-based retail behemoth overtook Boohoo co-founder and executive chairmam Mahmud Kamani as the company’s largest shareholder.

The FTSE 100 retail powerhouse first acquired a 5% holding in Boohoo in June, flagging the potential synergies between Boohoo and its I Saw It First and Missguided brands.

However, Frasers subsequently sold Missguided to Shein just over a year after buying the UK fashion label out of administration.

HUNGRY FOR DEALS

Besides its majority stake in Boohoo, deal-hungry Frasers has an 18.3% stake in ASOS and investments in a slew of other retail names, among them technology products specialist Currys (CURY), online electricals seller AO World (AO.) and German fashion giant Hugo Boss (BOSS:ETR).

Last week, Frasers pulled out of its agreement to acquire Sportscheck after the German sports retailer filed for insolvency.

Frasers said it ‘intends to work with the appointed preliminary insolvency administrator of SportScheck with a view to acquiring the SportScheck business/assets out of administration’.

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Issue Date: 04 Dec 2023