George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Good point portfoliopower1. I guess we will see in the summer. My personal opinion is that demand will fall with interest rate rises, reducing the pressure on airfreight. With the US distribution centre and normalising return rates I think Boohoo will remain cash flow positive.
Don't think the Debenhams and Sirius Minerals comparison is a fair one.
Boohoo's balance sheet is great and they have a capital light business model with easy scalability.
Sirius were in trouble with their cash flow and Debenhams faced changing consumer behaviour from the high street to online.
Depends on lots of things Smartie06.
Firstly I'm assuming that demand for dresses / going outwear remains robust in the age demographic. I think this is a fair assumption given that most students have easy credit / overdrafts and peer pressure to go out.
On the price, I'm assuming that all producers pass on a 'inflationary cost' onto consumers. I believe that Boohoo has transitioned slightly away from cheap fast fashion, with the emergence of Shein, who dominate that market. I'm assuming that the clothes are slightly demand inelastic, due to the marketing that Boohoo is very good at. This should enable prices to not affect demand to much.
The signs from the BOE are encouraging on this front, rate hikes should slow down economic growth and mitigate inflationary pressures. However, whether wages spiral out of control depends on how tight labor markets are.
On the cost of living it depends on the effectiveness of economic policy. In an ideal world wages rise in line with inflation and there a minimal problems. That probably won't happen, but I see wages rising enough to enable consumers to buy Boohoo's clothes.
I think there is also an element of Boohoo being able to leverage their cost position and take market share from other brands. That should smooth out falling demand.
It will be a rough few years, but I see Boohoo as being the dominant force in this sector, simply on a cost / quality basis.
Smartie06, Boohoo's demographic are primarily around the 16-24 mark. They are likely still living with parents (not paying bills) or have student loans / easy credit (buy now pay later)
Demand may struggle to grow at 20% but I can't see it falling.
There is a compelling bear arguement, however I haven't seen it mentioned much here.
If supply chain issues persist Boohoo will have depressed margins. This will impact the balance sheet. In order to maintain cashflows, the company has to grow, subsequently increasing CapEx. This is likely to be an inefficient allocation of capital in the short run. Marketing and competition is very high. If consumer desires change revenue could fall.
This would affect M+A capabilities and would damage future growth.
But I don't think this will happen.
- supply chains should ease when passenger flights resume.
-fast fashion is going nowhere in the short term.
Not necessarily portfoliopower. Liquidity should remain constant but I wouldn't expect it to increase. Producers will pass on inflationary pressures to consumers and the BOE have already expressed a desire not to be drawn into wage push inflation. That is unless the BOE restart their asset purchasing, but given the last time that happened it didn't go down very well I don't think economic policy will increase liquidity.
knowbodyyouknow, the sp has rightly dropped due to the fundementals changing. However, the sp movements have been more volatile due to negative sentiment. This should be around the £1.30 mark.
Aren't difficult times going to play into a discount e-commerce platforms strength? Capital light, solid balance sheet.
20 yr olds aren't going to stop going out if there is a recession. The demand will stay strong. Most people in this demographic have student loans / pay later credit. That won't go anytime soon.
Margins are a concern, however supply chain issues will ease by the end of the year / early 2023. Demand will spike with restrictions easing in the summer and festivals / holidays.
The TTM P/E is 12. If that's not value I'm not sure what is.
Boohoo will be in a solid position for M + A with brick and mortar retailers struggling. This will enhance their portfolio.