The changing of the guard at Boohoo is coming with some serious growth targets as the new chief, John Lyttle, seeks to replicate his success at Primark.
Mahmud Kamani and Carol Kane, cofounders and co-chief executive officers of the Manchester-based e-commerce company, will cede the corner office to Lyttle, chief operating officer at Primark, who will become ceo on March 15.
Lyttle’s base salary will tally 615,000 pounds, plus an annual bonus of 150 percent of his base pay.
But his real pay potential comes from a five-year growth share plan. Lyttle could earn up to 50 million pounds in the plan if he can increase the company’s market value by 180 percent, to 5.6 billion pounds, over five years.
Growth is the name of the game and Lyttle has experience navigating the waters BooHoo is entering.
The e-tailer has seen sales grow from 24.5 million pounds in 2011 to 579.8 million pounds last year as the company expanded organically, added categories such as beauty and picked up the flailing American e-commerce brand Nasty Gal. Primark’s sales during Lyttle’s time grew from 2.7 billion pounds in 2010 to 7.1 billion pounds in the fiscal year ended a year ago.
In a joint statement, Kamani and Kane said: “Our next priority for Boohoo is to ensure we have world-class infrastructure and technology in place and we believe John is the right person to lead that journey.”
Kamani will become group executive chairman and focus on the “long-term strategic direction” of the company, while Kane will become executive director and lead Boohoo’s “creativity and multibrand strategy.”
Non-executive chairman Peter Williams will also step down from his post, which will be filled by a new hire.
Kamani and Kane underscored that, “Both of us remain totally committed to the business and will ensure a measured and careful handover.”
Lyttle lauded Boohoo’s growth so far and said he would be “capitalizing on what is a global opportunity.”
Investors sent shares of the company up 4.3 percent to 1.77 pounds on the London Stock Exchange, but the change still caused a bit of hand-wringing.
Barclays analyst Andrew Ross said he was “surprised” by the shift, although he noted Lyttle appeared to be well qualified and that the cofounders were still involved and on hand to help with an “orderly transition.”
“But given that Mahmud Kamani and Carol Kane have been instrumental in driving the Boohoo growth story since its inception, this brings a tone of caution to the investment case in our view,” said Ross, who has an equal-weight rating on the stock.
He said some investors will suggest that Lyttle as ceo will “take the opportunity to reinvest” as he comes into the company, requiring that profit margins be rebased.
Some additional spending to prepare for the next leg of growth might well be in order, but if Lyttle hits his target, the cofounders, and other investors, are set to benefit.
Ross said Kamani and his family own about 30 percent of Boohoo shares, while Kane has a 4 percent stake.