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Boohoo.com (lon:boo)
boohoo – A Reasonable Adjustment Or Fake Sympathy
Boohoo.com Financials
Item
Current Period
Previous Period
Year
2020
2019
Period
6 Months
6 Months
Revenue
£816m
£565m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA
£90m
£61m
Statutory Profit
£52m
£36m
Adjusted Profit
Total Debt
Net Debt
(£344m)
(£207m)
Commentary History
Date
Title
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Thu 22 Oct 2020
boohoo – A Reasonable Adjustment Or Fake Sympathy
Boohoo.com Share Price
Grade:
No grade has been assigned to this company
Title:
boohoo – A Reasonable Adjustment Or Fake Sympathy
Company:
BOO - Boohoo.com
Share Price Then:
261.92p
Author:
Ian Smith
Date:
Thu 22 Oct 2020
Comments:
PWC announced that they were ceasing to be boohoo’s auditors and apparently a number of other large auditors have declined to bid for the job.
So are we just seeing PWC trying to improve its public image by shunning a company that has received a lot of flack for
not
breaking any laws or is it possible that PWC are seeing things that do worry it? But if that is the case then these issues should be brought out into the open.
Boohoo was started on 2006 by Carol Kane and Mahmud Kamani and floated in 2014, since then its share price was pretty stable for most of the last couple of years at around 180p-220p but saw some growth at the end of 2019 and a spurt over increased sales quite possibly related to work from home saw it peaking at around 400p
It may be worth noting that even at 262p the P/E is high at around 38, although this year’s sales would suggest that using H1 2020 numbers this would be closer to 19.
For a while now boohoo have been under fire for the working conditions of the employee in some of their suppliers mostly in Leicester. Since the start of 2020 they were aware of issues and were addressing them and they recently commissioned a report into this whole subject.
https://www.boohooplc.com/sites/boohoo-corp/files/final-report-open-version-24.9.2020.pdf
Starting on the 8th July 2020 the report was quite clear that Boohoo had done nothing wrong but there had been a lack of focus on the details of its suppliers and that a number of improvements had been made or were in process of being made.
It is well worth reading but I note that the team doing the investigation were three barristers, it may be my prejudice seeping in here but a lot of the reports sounds like "The case for the prosecution" and it would be interesting to see how other clothing retailers would stand up to similar scrutiny
Interestingly these barristers charged boohoo a fee, money which was presumably earnt by boohoo selling the products that the report had major concerns over, this didn’t see them subject to any criticism though.
Indeed I have gotten to the point of wondering if the there is an element of racism and left wing journalism deciding to make boohoo a story of the month and let’s blame Boohoo for anything vaguely related to the company rather than the things that they are responsible for.
On the subject of the business gross margin was reported at 55% with 57% being the average for similar businesses so they aren’t being silly with pricing on the majority of sales, even if there offers being sold at close to cost or even below cost.
Including boohoo the company has nine brands covering mostly 18-45 year olds but all apart from Karen Millar appear to be focused on lower price.
So I don’t see anything wrong with the company other than could be said about any other business. Yes this could be a boom year and next year could see volume down and supplier costs up. What would worry me more is how easy it would be for the company to miss an important market trend, for example most of its customers deciding that they want higher quality.
Or even worse someone decides that the way forward is to franchise physical shops and only allow one franchise per person, the whole marketing message being support local small businesses.
Personally I find the web sites tedious to use, but I find this with most sites where there are a lot of products and little though given to slow internet connections. So they also be vulnerable to a business that comes up with a completely different way of showing off the product range.
Boohoo have made a string of purchases, the online businesses of Oasis and Warehouse, and MissPap, Karen Millen and Coast so there are reasons for an investor to see the current price as a bubble.
What I don’t see is an NMC/Finablr.
Read Count/ID:
490/14190
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