RE: Re Shorts1 Oct 2022 16:39
Usual T4G tin hat cobblers :
TEMPUS WARNS INVESTORS TO AVOID BOOHOO SHARES ---------------------------------------------- Meeting even reduced expectations is proving very difficult for Boohoo. The plunge in the value of the pound and the prospect of a more severe financial downturn in Britain, means that lowering financial expectations might not save the fast-fashion retailer from disappointing full-year results. Boohoo cut its own profit guidance for the 12 months to February 2023 and a 10% fall in annual turnover is now expected. Its shares have lost all their pandemic gains and all the gains made since the flotation in 2014 - with many professional investors betting Boohoo shares have further to fall. Boohoo is now the most heavily short-sold company on the entire London Stock Exchange with over 10% of Boohoo’s issued share capital having been short-sold by professional Hedge Funds and Wealth Managers. On a forward (P/E) Price to Earnings ratio of around 18 times earnings, Boohoo shares are NOT cheap and they do not yet fully reflect Boohoo’s weaker growth prospects and declining revenue. The economic storm is perfect for destroying Boohoo’s profitability. Consumer spending is falling and costs are rising, particularly manufacturing costs, wage costs and freight costs. Boohoo claims it has planned for a fall in demand for its clothing, but the question is, how well. Stock levels at the end of August were apparently 15% lower than they were at the end of February, but that probably won’t save Boohoo from more heavy discounting, if the falls in sales are steeper than expected. Analysts at Shore Capital (Stockbrokers) expect Boohoo’s borrowings to hit almost £100 Million by February 2023 and it comes at a time when UK interest rates are rising rapidly and could hit 6% by May 2023. Drawing on more of its credit facilities, to fund capital expenditure will push up Boohoo’s borrowing costs and servicing Boohoo’s debts will take a big chunk out of Boohoo’s profits, leaving it perilously close to swinging into pre-tax losses for the year.
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