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Why Boohoo’s share fell despite a 41% increase in sales-latest retail technology news from around the world

Boohoo’s share price has fallen by about 7% today, despite a 41% surge last year.

The online fashion giant said revenue increased from £ 1.23 billion last year to £ 1.74 billion in the first full-year financial renewal since purchasing Debenhams and the three Arcadia brands in a rescue deal last year. It was.

Profit surged as EBITDA increased 37% to £ 173.6m, but investors were cautious about being a roller coaster for Boohoo for a year.

Shares have fallen from yesterday’s high of 344p to around 320 per share throughout today, seemingly marking the end of the explosive share growth that Boohoo has enjoyed over the last five years, growing 585% since 2016. I have.

According to industry-wide experts, this gap is due to two main reasons.

One is Boohoo’s ongoing debate over the supply chain, where stocks struggle to reach record highs throughout the year, despite runaway sales.

“Boohoo’s supply chain has been a crucial feature of the company for the past 12 months,” said Harry Barnick, senior analyst at Three Bridge.

“This is an advantage that allows Boohoo to quickly bring the latest TikTok style to life, but it’s also a weakness that damages the brand due to controversies over working conditions in the UK and abroad.”

“Boohoo is currently doing the complex task of cleaning up global manufacturing practices while remaining competitive as the fastest and cheapest player on the market. Avoid being permanently annoyed by operational questions. To do this, it needs to be whiter than white in the medium term. “

Andrew Wade, a equity analyst at Jeffreys, said Boohoo has made “significant” advances in addressing supply chain issues and has seen financial giants reiterate their “buy” recommendations.

read more: Boohoo’s sales and profits skyrocket after a turbulent year

He states: “In our view, Boohoo has made tremendous progress in addressing UK supply chain issues: capacity and personnel investment, chain-wide mapping and forensic audits, supply-based integration, and subcontracting. It is a reduction.

“In addition, while boohoo’s broad sustainability strategy (UP.FRONT) is clearly demonstrated, progress is already underway to audit overseas supply chains as well. Boohoo’s efforts to address last year’s challenges. Encouraged by our efforts and achievements, investors are more and more confident that these issues are a thing of the past. “

Others have raised concerns that Boohoo will struggle to maintain blockade-led growth over the next few months. This is reflected in the relatively slow growth expectations of 25%.

Susan Nastreat, Senior Investment and Market Analyst at Hargreaves Slan’s Down, commented:

“But Boohoo still expects revenue growth to be impressive at around 25% for the full year, 5% from the newly acquired brand.”

“Boohoo is now a fashion powerhouse, and investments in platform scaling are expected to continue to pay off, with even higher returns expected in the second half of this year, but the catwalk is completely clear. Instead, there is an uncertainty hurdle first. “

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Why Boohoo’s share fell despite a 41% increase in sales-latest retail technology news from around the world

Source link Why Boohoo’s share fell despite a 41% increase in sales-latest retail technology news from around the world

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