Member Info for Wibblewobble1

https://www.indigo9digital.com/blog/boohoo%20strategy

I think we can all agree that this in simple terms outlines BOO's business model....ultra fast and ultra flexible production on a test and repeat basis at ultra low prices for the Gen Z customers.
Well that worked superbly well up untill 2020 when the story broke that they were paying their local suppliers staff £3.30 phour.
Now we had all the hooha, handwringing and introduction of a centre for excellence factory to teach the local suppliers how to operate in a legal way.
But the business model was now broken. Minimum 40% of production in the uk to keep the super fast, super flexible test repeat methods going.....but now the cost base for manufacturing had increased by 300% due to the minmum wage being paid.
But the company never explained how they were going to deal with this conundrum....the prices have remained ultra low for their products to keep their appeal so it can only be assumed that margins have taken a severe hit. They were already operating on super thin margins in 2020 so how is the company going to produce profits?

https://www.theindustry.fashion/uk-online-clothing-sales-to-overtake-high-street-sales-in-2022/

Asos, boo and zolando have identical recent charts with 80% fall and bottoms not yet being put in place. As the falls predate the ukraine, inflation and much of the credit crunch it seems like profits jam tommorow on surging topline sales wore thin....but profit delivery by one should change sentiment and give a nice flag for all three although i still consider boo the higher risk of non delivery.

Oilers, a buoyant sector where mistakes will be rescued by the incoming tide...my current favourite is DEC but also hold BP. SHEL and GKP
They may not go on wild and woolly rides but your hair wont go grey and you will get some good capital growth.....try point betting if you still crave the adrenilan rush.

And before you say i am a sad b*stard to be posting at 1oclock....sadly i am waiting to pick up my daughter but that means i cant drink so i am a sad b*stard

One of the signs that you have entered into a mania phase is when people have trouble absorbing non-conforming information. “Confirmation bias” is a psychological behaviour where individuals disregard any information which conflicts with their current beliefs. While that bias has always been problematic for investors, in recent years, it has become worse as individuals lock themselves inside “social media echo chambers.”

A company loses 80%+ of its value and keeps falling but investors think its a super buy and needs averaging down and seek other investors to confirm this is true and disparage or try to get banned out of the echo chamber anyone who disagrees.

Sold 21% in 2020

Gymshark was back in 2020 when valuations were crazy and even Boo hadnt lost most of its value.....days when turnover was praised over profit.

Gymshark ?...........i did say it was a broad statement although in fairness they are talking about fashion, something even amazon hasnt got a grip on

"at scale the economics of ecommerce dont work".........an interesting viewpoint and although BOO is all about scale it cant possibly be relevant....a broad statement, totally unjustified :)

Lol, so you think the articles are wrong i take it. ...
You have written online trading plans, i am impressed, did the company survive you ?

Trading4good.....read these articles, then you might be a bit more clued up. Of course they may be wrong and you will demand they justify their views

The two articles highlight the problems with pure online fashion retailers.....there are no winners yet, no one has solved the problems and personally like returns, customer retention and new customer acquisition i think some will take years to resolve before we see profits growth matching turnover growth. A few will succeed but many will go by the wayside.....and the chinese are ****g monsters

Alex i dont dispute a single one of the examples you gave. In each case the sp collapsed, the company was turned around , the business model was corrected/proven and they went on to good things (sometimes wiping out the original shareholders along the way).......but the question i have for you is whether is reasonable to ride something down averaging and increasing risk as it falls....or whether astute investors wait till a recovery actually starts and makes a purchase then. ....its not too clever losing half or more of your investment on the way down pointing to other situations where fortunes were made. After all that may not be the case in this situation.

Actually trading4good, you never did explain why BOO sp has collapsed by 80%+ and keeps falling if everything is so damn glass half full upbeat kind of perfect

Namshi gets 70% of its sales from Saudi and 30%. From the other gulf states. An area whose customers are awash with oil money. It was bought by the Saudi backed wealth fun again awash with oil cash.......yet despite all that on your workings it would only give BOO a valuation of 130p if the purchase price was mirrored across......i think its a tad unlikely the Saudis will buy BOO for 130p, but do continue to live in hope by all means

Yes its confusing that others have so far retained their sp value but boo's has collapsed so spectacularly and keeps falling.....perhaps you have an answer for that ?

Alex, when all those things come to pass then the market may value growth without profit again ( but it would also need the worlds money printing presses to start up again to flush sp's full of cheap cash )

But profits seem elusive and its now profits that drive an sp not growth, something you dont seem to have adjusted to just yet.....i think that a collapse of the sp might signify that something isnt working, or do you have an alernative reasoning for the collapse. After all, its not even a recession yet

What is it that makes you think a bid could happen. Surely the company has to demonstrate its business model works before anyone would make a bid....after all, what would they be buying?

Good news is certainly needed to stop the falls but i have a worry that bad news on inflation or results could have a drastic negative effect on the sp....to such an extent that even the fear of bad news could take both lower....but boo has its new returns policy which may be showing signs of success although asc will have a full period of returns returning to its normal bad effect on profits to report.

You are probably right but then again it never is factored in is it...sp falls and as you say expects more bad news hence the price but when that bad news comes you get a further 10-30% fall eah time....and that doesnt answer the underlying problem that the business model doesnt work. Surely you wont get sustained II buying until that is fixed, if it can be....oh well time will tell