The online fashion retailer has had its share of ups and downs over the past few years, and this year Boohoo's share price moves haven’t been any different.
Rollercoaster ride for Boohoo’s share price
The Boohoo share price attained new highs in January at 333p, before a spectacular Covid-19 collapse to three-year lows at 157p in mid-March, which was then followed by a recovery to new record highs over 370p last month. In early June, the shares went higher still, within touching distance of the 400p level, before sliding back, along with the general declines in the stock markets last week.
The rollercoaster ride of 2020 was less pronounced last year, when Boohoo’s share price was up by close to 90% through the year, hitting what was then an all-time high of 316.9p on 29 November. Boohoo’s share price is now more than six times above its IPO price of 50p, back in March 2014.
In an update from April, Boohoo said it wouldn’t be providing guidance for the rest of the year, despite the fact it announced an impressive set of full-year results, for the year ended February 2020. Group revenue rose 44% to £1.235bn, with profit-before-tax jumping 54% to £92.2m. Revenue increased across all of its brands, with NastyGal rising 106% to £98.8m.
Boohoo takes full ownership of PrettyLittleThing
The bulk of Boohoo’s revenue still came through its own-named and PrettyLittleThing (PLT) brands, and it was this strength that probably helped play a part in last month’s decision to buy the remaining 34% of PLT that it didn’t already own, which will be funded through a combination of cash and shares. Boohoo bought a 66% shareholding in the group three years ago, so now it owns all the company. The retailer paid an initial £269.8m, which will rise to £323.8m if Boohoo’s share price holds above 491p over a six-month period.
This decision came in the immediate aftermath of a short-selling attack from a fund called ShadowFall Capital, which alleged that Boohoo had mis-stated its free cash flow for the year by £32bn, a claim which was swiftly refuted. The short-seller also claimed that the company was treating cash generated by PLT as though it owned the business outright, saying it could cost Boohoo almost £1bn to buy the remaining stake. Boohoo’s purchase of the remaining PLT stake poured cold water over that particular fire.
Boohoo aims to get Q1 off on a sure footing
Boohoo’s first-quarter figures, due to be released on Wednesday, come in the wake of a turbulent quarter, and could go a long way to putting another hole in last month’s claims from ShadowFall, as well as reassure investors who have had quite a ride so far this year.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.