Boohoo Group has launched a £35m share placement to strengthen its balance sheet and support its long-running turnaround, with its shares falling 10 per cent in early trading.
The Manchester-based fast fashion retailer, which renamed Debenhams Group last year to reflect that label’s stronger performance, said the capital raise would provide additional liquidity and help create what it called an “optimal capital structure”.
The placement, priced at 20p per share, has already secured preliminary support 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.
Founded in 2006 by Kamani and Carol Kane, Boohoo rose to prominence by selling affordable, trendy fashion online directly to consumers. The company had a multi-billion pound valuation during the pandemic boom but has since struggled with increasing competition from rivals such as Shein and Temu, as well as supply chain controversies and disputes with shareholders.
Over the past year, the group’s shares have fallen about 22 per cent to just over 20p, reflecting concerns about its financial position and the pace of its recovery.
The company confirmed that it is in advanced discussions with its lending syndicate to amend loan arrangements and increase financial flexibility. Any changed terms would be dependent on the successful completion of the capital increase.
Retail analyst Nick Bubb said the fundraising could add to investors’ fears that Boohoo’s turnaround is proving more cash-intensive than previously expected. He pointed out that the company raised around £39 million in November 2024 at 31 pence per share, highlighting the dilutive effect for shareholders.
Boohoo said it expects adjusted earnings before interest, tax, depreciation and amortization (Ebitda) of around £50 million for the year to February 28, up from its previous forecast of £45 million. The company is targeting a net debt to Ebitda ratio of around two times by fiscal 2027 and should fall below one by year-end.
Investment bank Peel Hunt raised its full-year Ebitda forecast to £50m, suggesting the group could return to positive profits for the first time since 2022.
Boohoo’s recovery efforts have been complicated by tensions with Frasers Group, which owns a 27 percent stake. The Mike Ashley-controlled owner of Sports Direct has repeatedly clashed with Boohoo’s board, including over the company’s rebranding strategy.
Last year, Frasers blocked attempts to formally rename holding company Debenhams Group Plc, despite changing its operating brand and switching its stock ticker to DEBS on the London Stock Exchange.
The dispute reflects similar tensions between Frasers and Asos, in which the company is also heavily involved.
For Boohoo, the latest cash call underscores the fragility of its turnaround as it struggles with tough online competition, operational headwinds and investor skepticism in a crowded fast fashion market.
