The Boohoo boss will resign as the company starts a review of its brand, which might lead to a split

John Lyttle will remain the CEO of the fashion group that owns Debenhams and Karen Millen until a new leader is chosen.

Boohoo’s CEO is resigning as the online fashion company reviews its brands, including Debenhams, Karen Millen, and PrettyLittleThing. This review might lead to the company being split up.

John Lyttle, who came from Primark in 2019, will stay in his position until a new CEO is found.

After this surprising news, Boohoo’s shares dropped more than 9% in early trading but later bounced back.

The company has been laying off workers due to increasing losses and declining sales, facing tough competition from rivals like the Chinese online retailer Shein. Boohoo also announced it secured a new £222 million loan with its banks.

The company Boohoo Group announced on Friday that it will review its business divisions to find ways to increase value for its shareholders. They believe the company is still undervalued, despite recent changes that have created five main brands for a wide range of customers around the world.

Boohoo’s market value is £404 million, and its share price has dropped nearly 90% over the last five years.

Mahmud Kamani, the executive chair and co-founder of Boohoo, said the board wants to take the right steps to benefit everyone involved with the company. He noted that Boohoo has changed a lot in recent years and now offers more than just young fashion. They believe it’s the right time to think about how to improve the company’s structure to increase shareholder value.

The company also reported that its adjusted profits fell by one-third to £21 million in the six months ending in August, while revenue dropped by 15% to £620 million.

Sales in the UK, which is Boohoo’s main market, fell by 2%. In the US, sales dropped by 18%, and in other parts of the world, they fell by 21%.

“Companies like Shein and Temu are making the market very competitive, which is causing problems,” said Derren Nathan, who leads equity research at Hargreaves Lansdown.

“CEO John Lyttle is leaving after five years. During that time, the company’s shares have dropped nearly 90%, so not many investors will be sad to see him go. The company is looking for ways to increase value for shareholders, but whoever takes over will need to take strong action right away to improve the situation.”

Published: 18th October 2024

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