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14 January 2021

Boohoo Sheds Positive Light on Gloomy Sector

Boohoo have reported their Q1 2021 Sales and Revenue figures, which have shed a positive light on an otherwise gloomy sector, highlighting the dichotomy emerging between those with a solid online infrastructure versus those without.

The company reported sales up 40% compared to Q1 2020, which comfortably exceeded analyst consensus expecting sales to be up by 29%. However, in the period the company’s margins tightened slightly, falling by 0.5%. This was somewhat expected in light of falling customer return rates and the headwinds from having to ship to different markets from the UK.

One of the closest major markets for Boohoo is the EU, and although the Brexit deal is now established, Boohoo expects an additional cost of around £1-2m. With these positive revenue figures, the company has raised its revenue guidance for 2021, from between 28-32% to 36-38%.

Following last year’s slavery allegations, Boohoo is still working hard to turn its image around, appointing Shaun McCabe to its board as the new Audit Committee Chair. It is hoped that these changes, combined with a number of other steps taken to achieving a more positive ethical outlook, can help the company build up the confidence of investors and win back some customers deterred by its unethical business practices.
Boohoo is pushing an expansion of its UK warehouse facilities, with the new capacity assisting the storage for its brands such as Nasty Gal, Karren Millen, Coast, Oasis and Warehouse. With lockdowns posing the highest level of restrictions since March, the sales of these brands may slow over the next few months. However, as we hopefully transition into a less-restricted society with the roll out of vaccines, the sales of these dressy brands are likely to pick up.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
 
Boohoo Sheds Positive Light on Gloomy Sector
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