Mike Ashley has a net worth of $4.2 billion, according to the Forbes Real-Time Billionaires List.
Frasers Group, owned by British retail billionaire Mike Ashley, has launched another broadside against Boohoo, alleging that the fast-fashion retailer is paying more than £2 million ($2.5 million) each year in undisclosed fees to its cofounder’s son.
Frasers alleges in an open letter issued late on Wednesday that Boohoo has been paying Umar Kamani, the son of Boohoo’s cofounder Mahmud Kamani, for providing “consultancy services” to the retailer’s subsidiary PrettyLittleThing (PLT).
Umar is the founder of PLT, which he sold to Boohoo in May 2020 for about £270 million.
“Frasers has recently been made aware of reports alleging that Umar Kamani is receiving payments exceeding £2 million annually from PLT to a bank account in Dubai,” the letter said.
And despite repeated requests, Boohoo hasn’t provided any details of Umar’s consultancy arrangement, according to Frasers.
The group’s letter said its surprising that Umar’s remuneration hasn’t been disclosed considering the “significance of the alleged amounts” and the “apparent conflict of interest concerns.”
Frasers is now asking Boohoo to urgently provide full details of Umar’s consultancy arrangement.
Boohoo did not immediately respond to a request for comment.
Frasers is Boohoo’s largest shareholder, owning a 27% stake in the Manchester-based fashion company, which has lost more than 90% of its market value since hitting its peak in June 2020.
Ashley has been pushing for months to overhaul the board of the fast-fashion retailer, lobbing accusations of “gross mismanagement” and “continued value destruction” at its leadership. Frasers even established a dedicated website so Boohoo’s shareholders could access its statements.
Just a day before Frasers issued it open letter, the group suffered a setback when Boohoo’s shareholders rejected its proposal to remove Mahmud from the retailer’s board. Boohoo said 63% of the votes cast at its general meeting on Tuesday opposed the removal of its cofounder.
“With the clear support of shareholders, the board calls on Frasers to end its attempts to destabilize and disrupt the group,” Boohoo said after the vote.
In December, Frasers failed to get shareholder approval for Ashley and restructuring specialist Mike Lennon to be appointed to Boohoo's board.
Boohoo, for its part, has been arguing that Frasers is acting in its own commercial self-interest and not in the interests of its shareholders. And Frasers has a history of this sort of corporate behavior, Boohoo said.
The retailer pointed out that Frasers had previously “used its shareholding of just under 30% to exert significant pressure on the existing management team” of Studio Retail Group. Frasers later bought that company out of administration.
Boohoo, which owns the Debenhams, Karen Millen and PrettyLittleThing brands, had benefited from a boom in online shopping during the pandemic. But increasing competition from rivals such as Shein and Temu has been cutting into its sales.
Boohoo was started by Mahmud and Carol Kane in 2006 as an online retailer that sells fashionable clothes for low prices. It was listed on London’s stock market in 2014.
Ashley began building his retail empire when he founded Sports Direct in 1982, a business that he turned into Britain's largest sporting goods retailer. He expanded his group of businesses over the years through series of high-profile acquisitions, including House of Fraser and department store chain Flannels. His personal fortune is now estimated at $4.2 billion on the Forbes Real-Time Billionaires List.
