PauL Scott - Small Cap Value Report - COMMENTS21 Dec 2020 15:19
Boohoo (LON:BOO)
(I hold)
New auditor appointed
As expected, it looks a mid-tier firm, PKF Littlejohn. Its website says PKF is the 7th ranked auditor of listed companies in the UK, and has more than 21,000 partners and staff globally (of which 2,030 in the UK). So it's not a mickey mouse outfit. I don't really care who audits the accounts, as long as it's a reasonable-sized firm with a good reputation (which this is), and not some local backstreet outfit.
Audit work always used to be the entree, with little profit, to get a foot in the door for more lucrative tax & deal advisory fees.
KPMG is helping Sir Brian Leveson, in cleaning up & follow-up reporting on the extensive supply chain measures that have been taken. Once everything is sorted out there, maybe KPMG could become the auditors in future? Does it really matter? The auditing sector seem to be frequently engulfed in their own scandals & failures, so I find it a bit rich that they're reported as being sniffy about not wanting to audit BooHoo!
It will be interesting to see what happens to the Arcadia brands. Newspapers are reporting that BOO is seen as the front-runner to acquire the jewel in the crown, TopShop. That would certainly be an exciting move, but Mike Ashley is also sniffing around apparently. With 9 existing brands, BOO has plenty to be getting on with.
Over the weekend, I thought it would be interesting to compare the number of Instagram followers that BOO's brands have, and this was the result;
PrettyLittleThing 12.9m
BooHoo 7.0m
NastyGal 4.9m
MissPap 2.5m
BooHooMan 1.4m
I didn't look at the smaller, more recently acquired brands (Oasis, Warehouse, Karen Millen, and Coast), as they're probably not significant at this stage (e.g. Oasis was only 355k).
In the table above, the numbers that really surprised me are PLT, which seems to be smashing it, at 12.9m followers, and NastyGal doing surprisingly well - which could be behind the very strong growth in American revenues reported in recent interims. If BOO brands continue growing strongly in America, then a listing in New York would make a lot of sense & could trigger a serious re-rating - look at FarFetch for example.
By way of comparison, Manchester fast fashion competitor MissGuided has the same number of Instagram followers as BooHoo, at 7.0m. Press reports say it is having a big resurgence, with sales up 45% (same as BOO group) this year, to c.£300m annualised, according to recent press reports, and is considering a stock market flotation.
Sign In
Follow the stocks
