Boohoo Group has launched a £35m share placing as it seeks to strengthen its balance sheet and support its long-running turnaround, sending its shares down 10 per cent in early trading.
The Manchester-based fast-fashion retailer, which rebranded last year as Debenhams Group to reflect the stronger performance of that label, said the equity raise would provide additional liquidity and help create what it described as an “optimal capital structure”.
The placing, priced at 20p per share, has already secured indicative backing of more than £24m from existing shareholders, including co-founder Mahmud Kamani, chief executive Dan Finley and director Iain McDonald. The company said it would engage institutional investors in the coming days to secure further commitments.
Boohoo, founded in 2006 by Kamani and Carol Kane, rose to prominence by selling low-cost, on-trend fashion directly to consumers online. It enjoyed a multibillion-pound valuation during the pandemic boom but has since struggled amid intensifying competition from rivals such as Shein and Temu, alongside supply chain controversies and shareholder disputes.
Over the past year, the group’s shares have fallen about 22 per cent to just over 20p, reflecting concerns over its financial position and the pace of its recovery.
The company confirmed it was in advanced discussions with its lending syndicate to amend loan covenants and increase financial flexibility. Any revised terms would be contingent on the successful completion of the capital raise.
Retail analyst Nick Bubb said the fundraising may reinforce investor worries that Boohoo’s turnaround is proving more cash-intensive than previously expected. He noted that the company raised around £39m in November 2024 at 31p per share, highlighting the dilution impact for shareholders.
Boohoo said it expects adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of around £50m for the year to 28 February, up from earlier guidance of £45m. It is targeting a net debt to Ebitda ratio of about two times by the 2027 financial year, falling below one by the end of that year.
Investment bank Peel Hunt raised its full-year Ebitda forecast to £50m, suggesting the group could return to positive earnings for the first time since 2022.
Boohoo’s recovery efforts have been complicated by tensions with Frasers Group, which holds a 27 per cent stake. The Sports Direct owner, controlled by Mike Ashley, has repeatedly clashed with Boohoo’s board, including over its corporate rebranding strategy.
Last year Frasers blocked attempts to formally rename the holding company Debenhams Group Plc, despite the operating brand change and ticker switch to DEBS on the London Stock Exchange.
The dispute mirrors similar tensions between Frasers and Asos, in which it also holds a significant stake.
For Boohoo, the latest cash call underscores the fragility of its turnaround as it battles fierce online competition, operational headwinds and investor scepticism in a crowded fast-fashion market.
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