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I have been adding at 319 as 320 upwards looks pretty stable albeit a few daily wobbles. Like others I wish I had more to invest here as every aspect of this business is exciting. Fingers crossed for a fabulous week fellow holders.
Thanks for your comments. I knew very of the company's past history and wondered why there had been relatively little institutional interest, but i can see what your saying and it makes perfect sense.
I wish i was on your position. I'd be all in this week.
Thanks for your reply Inferno. Having followed boohoo for about a year without committing I finally bought in when the sp crashed in July, fortunately getting them at 240p. It's helpful to have more of a background to this company but if anything it strengthens the investment case. It looks like the time many years ago that you're referring to actually saw a much higher P/E than we have currently despite yet proving itself for any length of time and with questionable management. The problems you described have been put to bed somewhat and sales are expected to grow enormously this year due to the coronavirus accelerating the move online for retail. Feels like it could be coming together for the company...
I probably should have avoided throwing out the £7 figure as it makes me look amateurish but I was just pointing out the likely sp come the end of the year if the company returns to the P/e levels it saw before the slavery allegations emerged.
@Chrishar - a word of caution from someone with a six figure holding in boo. Numbers alone have only even been half the story with this share, and moving forward whilst they will play a large part they won’t be the only part.
Long long long before the slavery wannabe expose the BoD struggled with credibility, funds were slow to invest as the BoD were basically seen as cowboys and amateurish, to be fair looking back the son was ahead of his time with understanding Social media and it’s power. However 3 years ago there was a perception that he was just a balling playboy spending dads dough! They rectified some of those issues by bringing in industry experts like the ex ceo of primark John Little.
The PE rating was also always an issue with people of financial influence thinking it was overvalued, with the growth we have seen that argument has weakened.
For what’s its worth I think there is loads of opportunity with the SP and it should hopefully Be a good 2 weeks fingers crossed. But whilst money talks and in most shares that would be enough it’s not enough in this one
I've been crunching the numbers this evening as I'm trying to decide whether to really go large tomorrow. Currently Boohoo is my fourth largest holding but I'm starting to wonder if I should put all my available cash in here tomorrow.
It appears Boohoo grew rapidly until the sp hit a stumbling block in June 2017 and from there the sp is currently only ~25% higher. At that time Boohoo were generating between £300m and £500m a year of revenue and profit of about £30m. The first three months of the year this year Boohoo brought in £367m! This was during a strict lockdown in which buying clothes was seen as putting delivery drivers at risk and therefore somewhat crass...
With Oasis and Warehouse only recently coming online and PLTs major launch in the middle east, we could easily see revenue far greater than £2b and a sp around the £7 mark. Yeah, decision made. Any share weakness this week and I'm all in. GLA!
This could genuinely be a monster 2 weeks for Boohoo.
I think there will be a rapidly closing window to buy below 320 this week.
Exciting share to be invested in.
For those of you who may not know already, Boohoo's half year/interim results run from 1 March 2020 to 31 August 2020. We know the sales from 1 March 2020 to 31 May 2020 were up 45% compared to the same period for 2019. We know this from the quarterly trading update released by Boohoo on 17 June 2020.
So, e-commerce/online sales showing strong growth in the USA. Good news for Boohoo's forthcoming half year/interim results due out on Wednesday 30 September 2020.
Super dry have their final year results out tomorrow also people. Should get some e-commerce read across.
Expectations are high for Nike (NKE) heading into the FQ1 earnings report, with the China business expected to show strong growth and e-commerce continuing to support sales in the U.S.
The shift by consumers to digital payments from cash during the pandemic is seen benefiting a long list of companies into the future. Digital pure plays PayPal (NASDAQ:PYPL) and Square (NYSE:SQ) are seen as long-term winners, as well as card networks/payment processors like Mastercard (NYSE:MA) and Visa (NYSE:V), Global Payments (NYSE:GPN) and Fidelity National Information Services (NYSE:FIS). Albertsons (NYSE:ACI) is profiled favorably as an undervalued sleeper and Nvidia's (NASDAQ:NVDA) deal for Arm Holdings is broken down in detail. If all goes well, Nvidia is seen becoming the most important chip maker in the world.
With more meetings now being conducted online, turn your focus to what can be seen on the screen: necklines, jewellery, accessories and chic make-up.
…dragging shares 27% from their YTD highs. But is this the right amount?
Boohoo shares are 27% off their YTD highs, substantially underperforming ASOS and Zalando by 53% and 66% respectively, albeit are up 45% from recent lows early after the allegations first emerged. Part of the share price action may relate to the technical effect of selling pressure as some funds reappraised if the Group continues to meet ESG hurdle criteria. However, our discussions with most investors focus on two key debates: i) will negative press weigh on wider consumer perception of Group brands and impact revenue growth, ii) will Boohoo’s margins prove unsustainable if it needs to raise sourcing standards in its supply chain.
Consumers do care somewhat about brands’ ethical perception…
Delving back into our proprietary Survey of Shoppers we show that, except in rare cases, consumer perception of brands’ ethical credentials is not a major motivator of shopping behaviour. Perception of Boohoo’s eponymous label was decidedly mixed before the recent accusations for example. We acknowledge the risk of a further decline to a ‘tipping point’ but don’t see evidence that has been reached yet.
…but our analysis suggests engagement with Group brands remains strong
We introduce new analysis of engagement of Group brands on Instagram, the dominant social media platform for the group’s customer base. Since the scandal broke one month into the as-yet unreported Q2 we have continued to see positive trends in metrics for the Group’s major brands. More net followers were added in Q2 than Q1, whilst our preferred relative engagement metric which also blends comments and ‘likes’ has also continued to trend consistent with strong revenue growth.
Costs of sourcing with more ethical rigour could dent margins…
The GBP10m committed by management so far to enhance supply chain integrity would only create a small drag. If accusations of supplier wage abuse turn out to be widespread then gross margin pressure could be very severe. However, the degree of anecdotal evidence suggests to us a more mild pressure is more likely, especially factoring in mitigation opportunities such as offshoring more production. We trim near term margin forecasts 30bps and our DCF-derived target price falls slightly to 370p.
…but we see a positive, if volatile, risk-reward
Further unscheduled and difficult-to-quantify newsflow is likely to continue to make Boohoo Group shares volatile over the coming months. However, having trimmed forecasts to reflect our most likely view of the impact of the accusations, we remain 5- 9% ahead of consensus on revenue expectations, and 6-12% on EPS (FY20-22). Even on consensus’ more conservative forecasts the shares trade on a 29% discount to history on both 12M forward EV/EBITDA and PE. Therefore, acknowledging Boohoo may not pass ESG hurdles for everyone at the moment we conclude the risk-reward looks positive.
Extracts from BNP's latest broker note: They have a target of 370p (4 Sep when the SP was 295p). Part 1
Investors haven’t fully forgiven, but most consumers seem to have forgotten
Boohoo shares are 27% off their YTD highs, albeit 45% up from recent lows following early July press reports questioning wage and safety compliance in its UK supplier factory base. Ahead of 1H results (30 Sept.) and publication of the independent review findings we attempt to assess reputational risks to sales growth using social media data and scenario-test headwinds to margins. We trim forecasts c.6% but remain 6-12% ahead of consensus. ESG-focused investors are unlikely to buy Boohoo now, but we see a good chance the financial impact won’t be severe and the company can gradually rehabilitate its standing amongst investors. We upgrade to Outperform.
Social media trends are looking healthy…
We delve back into our Survey of Shoppers to understand the importance of ethical credentials for clothing shoppers, and look at how that has increased recently. We also introduce a detailed tracker assessing brand engagement on Instagram, the dominant social media platform for the group’s customer base. Since the scandal broke one month into the as-yet unreported Q2 we have continued to see positive trends in metrics such as: followers; likes; comments and relative engagement for the Group’s major brands. We show the relevance and correlation of these metrics as well as potential risks of over-reliance on such indicators. The picture they paint is not one to suggest growth has collapsed. Further negative press, such as is likely to be seen when the investigation report is published, could reignite consumer awareness of the accusations but so far it appears the issue has been forgotten by Boohoo’s target market.
…though costs of sourcing with more ethical rigour could dent margins
Investments committed by management so far to enhance supply chain integrity would only create a small drag. If accusations of supplier wage abuse turn out to be widespread then gross margin pressure could be very severe. However, the lack of further negative anecdotes and our retail price benchmarking suggests to us a more mild pressure is more likely, especially factoring in mitigation opportunities. We trim margins 30bps and our DCF-derived target price falls slightly to 370p. With 22% upside though we upgrade to Outperform.
Negative press on Boohoo’s sourcing have dominated the investment debate…
Since late June the Boohoo Group has attracted significant negative press following allegations some of its UK-based suppliers may have paid staff below legal minimums and incurred safety breaches during COVID lockdown, weighing on shares and leading the company to commit to more substantial auditing as well as commissioning an independent review. The findings of this review are due to be made public alongside H1 results on 30 September.
Chris I went to a shopping centre - Brent Cross - for the first time in probably a year. That’s it now never again. As you say can’t use changing rooms in half the shops. Have to wait in line to get in to the shop. Annoying masks. The car park had load of spaces. Busiest shop in the place was apple and Zara. I like Zara business model as it’s very similar with where we are going with the in house factory. They turn around looks and trends as quickly as us but was I willing to wait in line. Nooope! It was surprising that most of the shops didn’t even have sales on I thought they would be desperate.
gggg there is no doubt that if high street retailers think they've had it bad so far, they've got another thing coming. Are people likely to get on public transport to reach the high street to put on a mask to wander through a clothes shop in which they aren't even allowed to use the fitting rooms and try stuff on? Frankly no.
I was just thinking this new lockdown/tighter restrictions could come literally at perfect timing for boohoo. With autumn/winter setting in the next few weeks....guess where all the activity/shopping will be done...online.
I can assure you that if it was a negative article every comment would be along the lines of 'Fools by name, fools by nature', 'Biggest load of tosh, who pays these numbskulls for this drivel?!'
I read the motley fool however and have learnt over time what to take away and what to ignore, and most importantly which contributors are worth their salt. Boohoo has become possibly the favourite stock on there over the past month and for good reason - it's a winner and the most exciting growth stock around...
“ But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!”
“ The stock is still around 25% below its all-time high. And City analysts following the firm have pencilled in robust double-digit percentage increases in earnings for the current year and the following year to February 2022.“
“ now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.”
Boohoo share price: why I reckon the current consolidation is another opportunity to buy