Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
There's a big growth vs value debate in finance at the moment.
I don't think you can go wrong with picking up good companies at great valuations. This is what I see Boohoo as. I think WB would tailor his style if he was starting in this market. I think he'd focus on getting companies with potential growth at undervalued prices.
What I like about WB is that his style is all about risk. Yes, growth and momentum stocks have a quicker short term upside. But buying at cheap valuations protects your investment over time.
You can never time the market Pf-78, sometimes it goes your way other times it doesn't.
I'm a big fan of Warren Buffet. He sits on shares his whole life and never sells. Patience is the best attribute you can have in this game. Just watch, in 12 months this board will be full of people screaming for the price to hit £3-5
I'm much more bullish on this on this share than most on this board at the moment tbh.
The market hates uncertainty. Once the March update comes smart money will start to move in here. The business is solid and festival season will provide a much needed boost.
I have a medium / long term view on this. I'm selling 65% of my holdings once this hits £3 and then the rest I'll let ride.
I'll be honest Pf-78 I have absolutely no idea about the movement of the share price in the short term. This share is being moved by smart money in the city.
Do not sell it. Lock the shares away and forget about them.
Share price falls due to transitory fundamentals and negative technical trends are NOT A BAD THING.
Buy low sell high. Its not complicated. Forget about the candlesticks and look at the fundamentals.
Maxage what are you talking about????
The posts on this board are getting ridiculous now.
Reasons for sp fall:
-labour scandal (market priced in consumer demand falling as a result)
- OPEX increasing due to supply chain issues + labour scandal resulting in production being outsourced (transportation costs increasing)
- return rates increasing to pre pandemic levels (exacerbated by supply chain issues)
- Inefficient CapEx (London head office purchased when US distribution center was required)
- Plans for growth hindered by all distribution being fulfilled by UK - hitting margins
- Poor Management (no buybacks / poor communication / bad image around owners)
- Fast Fashion having secular headwinds due to the environment - consumer demand will fall in the long term
- Competitors offer a more compelling offering for the conscious consumer
- Consumer behaviour is shifting towards less spending and saving clothes for longer. This directly contradicts Boohoo's test and repeat model
- Margins being squeezed due to supply chain issues, market is pricing in debt for the future and Boohoo being in a less competitive position for M+A
- Tough competition in the fast fashion sector causing a high marketing to sales %. Market is pricing in that figure increasing in order to facilitate future growth. If supply chain issues persist net income could turn negative.
- Short seller activity due to reasons mentioned above.
Fredster:
Boohoo Headwinds:
-labour scandal (market priced in consumer demand falling as a result)
- OPEX increasing due to supply chain issues + labour scandal resulting in production being outsourced (transportation costs increasing)
- return rates increasing to pre pandemic levels (exacerbated by supply chain issues)
- Inefficient CapEx (London head office purchased when US distribution center was required)
- Plans for growth hindered by all distribution being fulfilled by UK - hitting margins
- Poor Management (no buybacks / poor communication / bad image around owners)
- Fast Fashion having secular headwinds due to the environment - consumer demand will fall in the long term
- Competitors offer a more compelling offering for the conscious consumer
- Consumer behaviour is shifting towards less spending and saving clothes for longer. This directly contradicts Boohoo's test and repeat model
- Margins being squeezed due to supply chain issues, market is pricing in debt for the future and Boohoo being in a less competitive position for M+A
- Tough competition in the fast fashion sector causing a high marketing to sales %. Market is pricing in that figure increasing in order to facilitate future growth. If supply chain issues persist net income could turn negative.
- Short seller activity due to reasons mentioned above.
IMO the market has priced in the worst case scenario here. The equity is trading at v. low multiples compared to historic levels and I think supply chain issues aren't as bad as feared. I see the price at £1.50 come the summer and if growth can get back to normal levels (20-30%) there is no reason why this won't be back at £3.
Other posters on this board can summarise the headwinds of ASOS better than me, but the issues mainly lie with supply chains.
In terms of price targets, personally I'm not looking at a price for ASOS. Boohoo is a short / medium term investment until it hits £4/5. But ASOS is a great company that has long term growth prospects. They are in vintage, sustainable fashion and have one of the best platforms for fashion in the 20yr old demographic. I can see a big name acquiring ASOS in the future. The volatility for ASOS should calm down once it moves to the FTSE 250 and I can see £30 in the next 12 months.
Thanks rag, I sell vintage clothes, so I know a few of the UK wholesalers that supply ASOS. Like you mention, there's so much supply, you'd be shocked at how much there is. I'm quite surprised by how much they are charging for the stuff though. The trade price for second hand Levi's jeans is about £5, but ASOS charge £60+ I'm not sure why the price is so high, maybe its because they just want the best quality vintage stock?
Ragtrade, listen to the last earnings call. An analyst asks your exact question. The response was along the lines of: we're not going to raise prices by x but instead watch competitors and supply chains to raise prices.
Maxage, the MOAT is there for Boohoo. Brand perception is very hard to attain in this sector, hence the high marketing to sales percentage. Boohoo's moat is their loyal customer base, and their effective marketing strategy. Competitors have to have a high marketing budget simply to compete, damaging their margins and profitability. This is why the labor scandal / returns have impacted the sp so much.
Automation has also lowered to unit cost of production to a degree where competititors have a high barrier to entry to compete with Boohoo on price. That is also a moat.