Just no value in boohoo18 Apr 2023 16:08
The 80% drop in share price is justified here given the problems.
Although it was once growing quickly, certainly upto wen covid hit and everyone switched to online boo continues to struggle due to a range of headwinds.
Last year shipping costs and transportation delays caused huge issues which haven't gone away, from the Q1 TU “extended delivery times compared to pre-pandemic levels [are] continuing to affect the proposition.”
Rising inflation is also a serious concern which will put more pressure on already wafer thin margins. Not only does this increase the cost base for the company, but revenue can also take a hit from the consumer side. After all,people are having to choose between heating or eating and if they are that desprate for clothes, well they can buy a fraction of the price from Shein!
Again from the TU "Revenue for the last four months of the year was down 11% versus the same period in 2021"
The rot really has set in Southcoastbather (AKA T4G)
Fast fashion has very poor ESG credentials & has always been a tough sector to operate in yet bizzarely boohoo is pushing ahead with international expansion, such as with the new US distribution centre. The problem here is that it opens itself up to battling different local competitors. Rather than just sticking to the domestic market and doing it well, the strategy abroad isn’t working yet (judging by the latest financials).
Investors think its cheap because it's down over 80% but with net profits at -£4m and a market cap of over 600m then it looks awfully expensive to me. We can’t use the price-to-earnings ratio to assess its value either AS IT HAS NO EARNINGS. and some are predicting there wont be any earnings until 2026 at the earliest
Shocking.
The lesson here is just because something has fallen in value, it doesn’t mean it’s always undervalued. There may be many valid reasons why the stock has dropped. And if anything, I feel boohoo shares are significantly over valued when I consider it from a fundamental perspective.
The picture hasn’t really changed & there's no way anything in 2023 will be a big enough catalyst for boohoo shares to meaningfully rally. Many of the problems from last year (inflation, higher cost base, lower demand) will continue to eat away at boohoo sales and margins & competition will be just as fierce, both at home and abroad.
There's clearly much better value elsewhere right now silly little southcoastbather. But you would rather be right then rich lol
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