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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Following a profit warning in January which saw the shares down from not far shy of 40p, online fashion retailer boohoo (BOO) has recently announced results for its year ended 28th February 2015. The following reviews…
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Comments
Paul Scott
Hi Steve,
I went to the analyst presentation last week held by BooHoo at Buchanan’s offices.
Management are upbeat about current trading, and it’s clear that they’ve sorted out the various issues which hit them in late 2014.
Also, they’ve been massively expanding their warehouse & installed new IT systems too, plus a load of new admin people. So the business is gearing up to be able to handle sales of up to £500m p.a. (over 3 times the current run rate).
It’s the only UK listed etailer which makes a decent profit margin too – and it throws off cash as it expands, so the cash pile is becoming embarrassingly large, at about 4.8p per share. Once you adjust for that, and the likelihood that analyst forecasts are probably erring on the side of caution now, then the valuation actually looks rather attractive for a business that is generating strong organic growth, and is expanding overseas too.
It’s clear that the 50p IPO price was far too high, and growth expectations were too high. But now that’s been reset, I think it looks a very attractive proposition.
They are launching their App in about 2 months. Amazingly, they’ve not had an App until now, so that could provide a useful stimulus for further growth perhaps?
With respect, I think you’re a little behind the curve on where the business is now. But equally I can understand that people want to see more proof of progress, since confidence was badly rocked by a profit warning within a year of listing, which is seriously bad form!
Regards, Paul.