Executives at Boohoo are contemplating a potential breakup of the struggling fashion retailer due to rising pressure from shareholders aimed at revitalizing the company’s performance.

The online fashion entity, which includes prominent labels such as PrettyLittleThing, Karen Millen, and Debenhams, has experienced a significant decline in share price and an increase in losses, driven by fierce competition and the resurgence of physical retail following the pandemic.

Multiple shareholders have reportedly urged the board to consider breaking apart the Manchester-based organization and monetizing some of its stronger brands to enhance stock value, which has plunged over 85% in the last five years.

Insiders indicated that there may be substantial possibilities in spinning off or divesting Debenhams and Karen Millen, both of which are considered valuable brands. Additionally, fast-fashion brands such as Boohoo, BoohooMan, and PrettyLittleThing could also be on the table. “The combined value of Boohoo’s brands exceeds the current market capitalization; hence the necessity to break it up if that value is to be realized,” stated one source.

While there is no definitive plan for a breakup or how it might unfold, co-founders Mahmud Kamani and Carol Kane are reportedly keeping all options open.

Observers have noted that with the current state of the share price, Boohoo’s leadership is exploring all avenues to enhance shareholder value, with Kamani actively listening to investor feedback. The company plans to evaluate its Christmas trading results, a critical sales period, before finalizing its strategy.

Founded in 2006, Boohoo rapidly emerged as one of Britain’s fastest-growing retailers, capitalizing on the e-commerce boom. It went public in 2014, witnessing its shares trade significantly above the initial float price on the junior AIM market of the London Stock Exchange, valuing the company at nearly £600 million. This IPO generated substantial wealth for Kamani and Kane.

Following its initial success, the retailer expanded through numerous acquisitions, including notable brands like Misspap, Karen Millen, and Coast in 2019, followed by Warehouse and Oasis in 2020, and several high street names such as Debenhams, Dorothy Perkins, Wallis, and Burton in 2021.

However, the online-only model has seen a steep decline since the end of the pandemic as customers returned to physical stores. Increased competition from emerging fast-fashion brands like Shein, as well as secondhand platforms such as Vinted and Depop, has posed additional challenges.

As of February’s financial year-end, the group accumulated net debts of £95 million, a stark contrast to the previous year’s net cash of nearly £6 million, amid a 76% downturn in profits to £160 million and a sales drop to £1.8 billion. Recently, Boohoo had to shut down its US warehouse in Pennsylvania, which had been operational for only a few months, to improve its financial standing ahead of an impending debt deadline.

Some investors have capitalized on Boohoo’s diminished share price, with Mike Ashley’s Frasers Group now holding a 26% stake—surpassing Kamani’s approximate 12% ownership.

Frasers Group also maintains significant interests in Asos, a direct competitor of Boohoo, which has recently sold a minority stake in the Topshop brand to shore up its own finances. Similarly, THG, previously known as The Hut Group, plans to separate its tech services branch in an effort to address its declining share valuation.

Boohoo’s shares have decreased by 20% this year, despite a recent uptick with a 5.5% increase over the past week, closing at 29p last Friday.

A spokesperson for Boohoo stated, “Boohoo Group does not comment on rumor and speculation.”