The Boohoo Share Price Starts the Year Off on a Negative Footing

The Boohoo Group PLC (LON: BOO) share price has fallen 6.62% in the first two trading days of the year amid negative sentiment towards the fast fashion company. However, the question remains: can Boohoo turn around its fortunes as the year progresses? Let’s do a critical analysis of the company. 

The fast fashion company has faced multiple headwinds spearheaded by the rising cost of living that has seen most consumers reduce their spending on fashion items as much of their income goes to paying for the necessities that now cost more than they used to in the past. 

Boohoo has also been dealing with many product returns from its customers as they become more picky about the products they like and those they think do not suit them. However, as inflation slows down due to the central bank interest rate hikes, we could see a resurgence in sales volumes at the company. 

Meanwhile, the company is in the middle of a turnaround plan that has seen it open a massive US warehouse to serve its American clients better, given how crucial this market is to its overall sales success. 

Boohoo’s latest financial figures indicate a downturn, with revenues falling 17% to £729 million in the first half of the fiscal year. Gross profits also declined, decreasing by 16% to £389 million, and gross margin was recorded at 53.4%.

Significantly, Boohoo anticipates this downward trend will persist in the upcoming months, projecting a revenue decline of 12% to 17% and an adjusted EBITDA margin of 4% to 4.5%.

Boohoo has also attracted a lot of interest from Mike Ashley’s Frasrs Group, which has been buying shares in the company and is now the largest individual shareholder with a 17.22% stake. 

The company could be a potential takeover candidate from private equity firms and other investors looking to capitalise on its depressed share price that has crashed massively from its all-time highs of 433p to trading at 36p at the start of the year. 

Overall, there is still hope for Boohoo’s share price recovery as the year progresses. 

Boohoo share price. 

The Boohoo share price has started the year off by falling 6.62% in the first two trading days.