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Online fashion retailer Boohoo denied allegations from a London-based hedge fund that it had overstated profitability by understated costs from its Prettylittlething subsidiary.
The allegations pressured the company's share price to fall sharply on Tuesday.
Shadowfall, a London hedge fund that specialised in taking positions against companies' share prices, reported Boohoo had overstated cashflow by £32m.
Boohoo said it 'strongly' refuted the allegations made in the research note, which also alleged the company was treating cash generated by its PrettyLittleThing (PLT) subsidiary as wholly-owned subsidiary.
'Whilst the group has recognised the minority interest in this manner at a statutory level, for adjusted earnings per share, the group has deemed it appropriate to recognise the full 100% of the 34% of PLT's adjusted net profit to allow its shareholders and readers of the accounts to fully understand PLT's underlying profitability,' the company added.
At 9:28am: (LON:BOO) Boohoo Group PLC share price was -8.85p at 329.45p