- Boohoo shares plunged 15.3% after reporting weak sales in Q1 2023.
- The fashion company’s sales fell slightly in Q1, but markets overreacted.
- So is Boohoo a buy at current prices, or will it go lower? Read on to find out.
The Boohoo Group PLC (LON: BOO) share price plunged 15.3% after the fast-fashion company reported weak revenues for the three months to 31 May 2022. Investors reacted harshly to the slight decline in Boohoo sales, as evidenced by the decline.
Also read: The Best Clothing Stocks To Buy.
Negative news from the fast-fashion company has been triggering significant declines, despite the firm being one of the best-performing fashion brands in the United Kingdom. Boohoo has an asset-light business model, given that it is primarily an eCommerce brand.
The downtrend in Boohoo shares seems to have no lower limits, given that the shares just broke below the 65.74p long-term support level that has been in place since August 2016. So no matter what Boohoo does, the markets will always punish the firm.
Boohoo today reported that its UK revenues fell 1% to £272.1 million from last year’s £274.6 million, while its United States revenues plunged 28% to trade at £95 million from FY2022’s £13.9 million. However, sales from the rest of the world rose 15% to £29 million compared to last year’s £25.2 million.
The fashion company told investors that demand for its products remained relatively high despite the tough comparatives from last year when most people were shopping online due to the movement restrictions imposed by most governments.
Boohoo has taken steps to boost its supply chain by signing a lease for a new distribution centre in Elizabethtown, Pennsylvania, to help improve its international operations and boost its supply chain in the critical US market. The new facility is expected to start operations in mid-2023 minimising the firm’s US shipping costs.
The company expects to start live, automated operations at its Sheffield flagship store and distribution centre in H2 2022. The fast-fashion firm has also implemented strict inventory management measures to maintain low stock levels and minimise overheads.
Boohoo’s performance is not unique since the entire UK retail sector has been affected by the record-high inflation that has left consumers with less disposable income. However, it is still one of the companies that will do well over time.
However, I wouldn’t buy Boohoo shares at current prices since they are likely to keep falling.
*This is not investment advice. Always do your due diligence before making investment decisions.
Boohoo share price.
The Boohoo share price plunged 15.31% to trade at 55.09p, falling from Wednesday’s closing price of 65.05p.