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Boohoo Shares Have Fallen 68.2% This Year. Can They Recover?

Simon Mugo trader
Updated 25 Nov 2022

The Boohoo Group PLC (LON: BOO) shares price is down 68.2% this year and has left many investors wondering what comes next for the company. This year’s decline is unique in that, for the first time in many years, Boohoo reported a £4 million post-tax loss.

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The eCommerce fashion retailer revealed that its revenues fell 10% to £882 million in the six months to August 2022, as consumers cut back on their discretionary spending amid the harsh economic conditions. However, the company also saw high customer returns for the same reasons. 

However, challenging economic conditions have hit most of the players in the fast fashion industry, including competitors such as Asos, which have reported similar trends. Nevertheless, despite the harsh climate, Boohoo’s business model gives it significant advantages that could allow it to recover quickly once economic conditions change. 

Firstly, there will always be demand for clothes among Boohoo’s target customer base, which the company estimates to be made up of approximately 500 million people worldwide. Furthermore, the firm’s current customer base is 19 million, indicating significant growth potential. 

Boohoo is currently building out its distribution network in the United States, which it has identified as a crucial market. Once the company is done constructing its mega US distribution centre, US customers will be able to receive their orders quickly, which could significantly increase its market share in the country. 

The company’s online-focused marketing strategy is another advantage, given that it does not have the headaches associated with owning and operating a chain of retail stores. In addition, the company has launched some physical stores to showcase its merchandise.

The move to open a few stores in strategic cities and locations is similar to what many other eCommerce firms, including Amazon.com, have done, marking a shift from their purely-online business model. 

Therefore, while Boohoo faces significant challenges, I’m confident the company can work through the problems and return to revenue and profit growth in a few years. 

*This is not investment advice. 

Boohoo share price.

The Boohoo share price has fallen 13.94% in the past week but seems to have bottomed. What’s next?

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading