Shore Capital: Boohoo becoming too complex9 Feb 2021 05:50
Boohoo (BOO) has snapped up three high street names from Arcadia for £25m, which has led Shore Capital to warn on the increasing complexity of the online fashion retailer.
Analyst Greg Lawless reiterated his ‘sell’ recommendation on the group after it bought Dorothy Perkins, Burton and Wallis from beleaguered Arcadia, hot on the heels of its £55m Debenhams deal last month.
‘Boohoo continues to scale up but we question the bandwidth of the existing management team and potential execution risk continues to rise with every acquisition,’ said Lawless.
‘There is no doubt that Boohoo will trade these brands more commercially benefiting from the increased volume through its multi-brand platform, alongside its superior sourcing and marketing skills.’
However, he added that ‘the complexity of the group continues to rise’ while there are also the ‘longstanding’ corporate governance issues to consider. That led the analyst to conclude that while the business continues to scale they need to see ‘tangible evidence of cultural change’ within the organisation.
The shares closed down 4.8%, or 17p, at 348p yesterday.