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What I mean by they pay the influencers is that along with the social media data they are so close to the trend influences, and with molly mae even weaving the target demographic directly into the fabric of boohoo. That can only be a smart thing to do and mirrors what athletes have been doing with Nike etc for decades.
Haha. Well speed is the difference. And it's not marginal either. Its horse and cart vs a jet plane.
Think about the trend insights from millions of social media interactions, not to mention the fact boohoo pay the influences that set these trends.
You tie all this together and the idea of the £1 bath bomb being a competitive advantage seems..... well hilarious. Which it is.
No, companies like Boohoo can shape their offering far more efficiently and have far more insights into their customers than anything we've seen before, and they will only get better at it.
Whoever manages their data best wins. Imagine an Amazon warehouse on the edge of 10 different cities across the world, each one containing perfectly selected inventory, seasonally adjusted for those specific geographic locations and customers, all of which can be delivered within 1 day, and often same day. It's hard to enter in against that once someone has done it. There is a first mover advantage which increases with scale.
Would you rather log in to your account and see things curated that fit your style, perfect for the season, delivered nextday at the price point and quality you tend to buy at, and over time that perfectly fits. Alternatively you can elbow your way through the city centre after you've paid £6 parking with no guarantees you can even find what your looking for and where 90% of everything on the shelves is not relevant to your needs. Don't look at where boohoo is now, rather imagine what this level of data driven insight will allow 10 years from now. I'm not saying boohoo will 100% win the game, but I'm pretty sure I know who won't. If your best defence against all this is an email address list and £1 bath bombs, you may struggle a bit.
We already live in a world where it's quicker to have a mcdonalds delivered than go to the restaurant. It's only just started. Luxury shopping will remain on the high street sure, You don't order a 10k Rolex online, and same with a good quality restaurant. They are selling experiences, they need the bricks and mortar. Consolidation is coming. City centre retail is only going to decline, it remains to be seen how more local stores perform.
It'll be nice, city centres will likely become hubs of more experiences and culture and high end shopping.
Hardly complicated is it. Net of cash the current market value of 3 billion is around 22 times after tax 2022 earnings. This is a small premium relative to the market given Boohoo's growth. The fact it's undervalued given its growth is almost trivial given how obvious it is, the question is will Boohoo fix the issues that have got us to this valuation.
The argument of competition from Shein doesn't hold much water to me. The fact Shein is so successful should bolster investors understanding of the secular trend happening right in front of us, and there's room for more than Shein. Contrary to a certain comedian on this board, the cost to buy the data moat Boohoo enjoy is a big barrier to entry and something Primark have reiterated time and time again. The high street will always have luxury shopping, but the number of general retail stores is only going to continue to shrink. The 30% increase in online shopping since pre-pandemic will never be reversed, and will only increase over time. There's 1st mover advantages here and just like many other sectors there is going to be a lot of consolidation happening.
Shein and Boohoo are both competing with each other of course, but the real story is that they taking market share from incumbents, and given Boohoo's size relative to the fashion market, it has a long runway ahead of it.
Won't be long before investors see 200 million after tax earnings on the not so distant horizon and realise this valuation is wrong by some margin, but investors are right to be nervous about Boohoo scandals and Esg concerns. At some point Shein will have to be held to the same standard. I think it's positive all this is coming out, it'll force Boohoo to change and they will be stronger on the other side. If you are speculating over short periods, you deserve the poor results your going to get, but I've no worries that this valuation is a great entry point for the long term if you believe the current issues will be resolved.
On another note I've never seen someone with such level of conformation bias as Kallu. It's comedy. I don't know if anyone missed it but when asked why Primark had performed so poorly over the last 5 Years and his reply was "I think people have felt guilty about buying more clothes" haha.
As for him outperforming fund managers, it's both very unlikely given how foolish his posts are (anyone can get lucky though), but regardless he doesn't run the same level of money. Running millions is much different from running a few hundreds thousand.
Oh and as for "Primark dont put out excuses", well you'll see in the below link that this is also just a bit of cognitive dissonance from Kallu. It's not the only time they've said it either.
https://www.standard.co.uk/business/primark-blames-unseasonable-weather-for-decline-in-sales-a3982196.html