The wealth of the founder one of the UK’s biggest fashion retailers, Boohoo, has plummeted a staggering half a billion pounds in just two years and the company’s stock has become the most shorted in the UK in the latest blow for the firm as it deals with a downturn in sales and a greenwashing investigation by the UK competition watchdog.
Mahmud Kamani, the British retail tycoon who founded Boohoo in 2006, has seen the value of his share in the business shrink to just £60 million from a high of over £570 million in 2020, an Evening Standard analysis found. The firm’s market cap fell below £500 million this week, a drop of over 90% from its June 2020 high of over £5 billion. Kamani controls a 12% stake in the firm, according to Refinitiv data.
Disclosed short positions in the online fashion retailer reached 9.65% today, up over 2% on last month, according to market insight firm Research Tree, edging closer to the 10% threshold some investors consider alarming for the health of the stock.
Boohoo has begun cancelling orders from suppliers amid falling demand for clothes, the Sunday Times reported earlier this week. “As is the case across a retail sector navigating uncertain demand, we are constantly reviewing our requirements,” a company spokesperson said.
Boohoo sales slowed 8% to £446 million in the three months to May, led by a 28% drop in sales to US customers. The retailer’s ‘Ready for the Future’ range is being investigated by the Competition and Markets Authority on whether its environmentally sustainable claims are inflated. Boohoo said it was “committed to providing its customers with accurate information on the products they buy.” It comes little more than a year after the firm faced a potential export ban to the US after border protections authorities said they would investigate claims of forced labour in Boohoo’s supply chain.
Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown, said: “The very worst of the supply chain scandal is behind Boohoo, but it seems one challenge is being traded for another. Very strong comparisons with last year make current trading look poor, as the world is no longer frantically ordering loungewear from the sofa, and when we do place an order, it’s a lot more likely to end up in the returns heap back at Boohoo HQ.”
The firm’s new CFO Shaun McCabe, poached from the Trainline earlier this year, is due to take up his new role next week, Boohoo announced this morning. The firm is due to post half-year results tomorrow.