Southcoastbather28 Mar 2023 10:44
Interesting I found this after less than 10s looking into BOO hoo fundamentals on the internet. Doesnt read particularly well
Reasons to be cautious
However, its toe-in-the-water approach hardly represents a big commitment to physical retail. And there are plenty of challenges that could derail the company’s solid progress this year.
Chinese competitor Shein has taken the world’s fast-fashion market by storm. Shein is also boosting its in-person retail presence in the UK with pop-up stores next month in Bristol and Cardiff. This follows the company’s Birmingham experience that coincided with boohoo’s London launch. The battle for Gen Z consumers is heating up and boohoo will have to be nimble to stay in the race.
Beyond the competitive landscape, my primary concern rests with boohoo’s latest financial results. In my view, they don’t appear to justify the recent rapid share price growth.
Total revenue for the four months to 31 December 2022 was down 11% year-on-year at £637.7m. In addition, the company expects its EBITDA margin for FY23 will be 3.5%. That’s toward the low end of a previous forecast of between 3% and 5%.
Plus, boohoo faces a backlash regarding renumeration plans. The business intends to reward bosses with £175m of bonus payments if the share price recovers in line with a series of targets. Although chairman Iain McDonald is confident this will “resolutely align” the interests of management and investors, many independent shareholders voted against the proposal.
Should I buy boohoo shares?
There are positive signs for boohoo after a miserable 2022. In particular, I like the company’s — albeit limited — ambition to tap into the potential of bricks-and-mortar retail.
That said online retail remains its key focus, and I’m yet to see enough concrete evidence the business is on a sustainable road to recovery. Intensifying competition is a big worry.
As things stand, I don’t think boohoo shares are my golden ticket to get rich. I await the release of the full-year results in May, but, as things stand, I’ll be looking elsewhere for stocks with a better risk/reward profile.
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