Boohoo sidesteps Frasers over new management incentive plan

British fast-fashion retailer Boohoo Group Plc will bypass major shareholder Frasers Group Plc on a new management incentive plan, as it pushes ahead with its turnaround efforts.

The group behind Debenhams.com and Boohoo.com said that while sidestepping a key shareholder on a pay plan runs against usual corporate-governance practice, the decision was justified because Frasers has repeatedly sought to disrupt the company’s strategy and future success.

Representatives for Frasers didn’t immediately respond to a request for comment.

The move comes as Boohoo reported a 23% drop in first-half revenue, missing analyst estimates. Still, its gross margin was ahead of expectations and the company sees earnings before interest, taxes, depreciation and amortization growing in the double digits next year.

Shares of Boohoo jumped as much as 24% in early London trading, the most on an intraday basis since April. They had lost about two-thirds of their value this year through Wednesday’s close.

“The turnaround plan is coming together at pace,” analysts at Panmure Liberum said in a note. “When top line growth returns this is well set for very strong EBITDA margins and cash generation.”

Boohoo said it wants a new program because incentives didn’t include chief executive officer Dan Finley or chief financial officer Phil Ellis — despite both being central to delivering the company’s turnaround. Payouts will be triggered at various market capitalization milestones, starting from when the stock triples from its current baseline level, Boohoo said.

The decision not to consult Mike Ashley’s Frasers Group is the latest development in a long-running spat that includes wrangling over board representation. Earlier this year, Ashley voted against Boohoo’s move to rebrand itself as Debenhams Group.

When Boohoo bought Debenhams out of administration in 2021, it shut the chain’s unprofitable stores and relaunched it as a marketplace featuring around 10,000 fashion, home and beauty brands.

The company is also reviewing other parts of its portfolio, including a potential sale of its PrettyLittleThing brand, and is consolidating warehouse operations.