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Boohoo – Markets React Positively As The Group’s On Track For Guidance

By Jacob Wolinsky. Originally published at ValueWalk.

Boohoo Mean Reversion Persimmon worst performing stocks of November 2011

Boohoo Group PLC (LON:BOO)’s fourth quarter net sales rose 7%, with full-year growth coming in at 14%. Compared to pre-pandemic levels, there was a 61% increase. Trading has been in-line with guidance.


Q4 2021 hedge fund letters, conferences and more

Higher returns rates were a headwind in the final quarter due to customers favouring clothing items that are more likely to be returned, something that’s expected to continue in the first half of the new financial year.

Performance in the UK was strong, with International trading impacted by longer delivery times due to supply chain pressures. Rest of World returned to growth in the fourth quarter, reflecting a positive performance from wholesale. comment

Full-year cash profit (EBITDA) is expected around £125m, in line with guidance.

John Lyttle, CEO, said: “The Group has delivered strong growth over the last two years, which has translated into significant market share gains.” And expects ongoing pandemic related challenges to be “short-term in their nature”.

On 8 March, the group announced it had completed its ‘Agenda for Change’ programme, launched in response to criticism surrounding its supply chain and working conditions.

The shares were up 11.0% following the announcement.

Boohoo’s Guidance

Matt Britzman, Equity Analyst at Hargreaves Lansdown:

“The market’s very positive reaction to what is, on the face of it, simply an update stating how guidance will be hit shows the level of uncertainty surrounding Boohoo. Back in December guidance was lowered by a pretty decent chunk, with the group pointing to everything from higher freight costs to Omicron concerns. Rebasing guidance is rarely a good thing, but the positives from this update are that they look to have stabilised which will help instil more confidence from markets.

That’s not to say the challenges are gone, far from it. International customers are still having to wait longer than they’d like to receive their orders, as supply chain issues linger on, which is hurting demand. And higher returns across the board are hurting the net sales figure, a headwind not expected to fall away until the 2nd half of the new financial year.

Management expects these challenges to be short lived, which seems reasonable. But Boohoo has some work to do if it wants to regain investors’ trust. The completion of the ‘Agenda for change’, which was put in place to address issues with worker pay and wider conditions within supply chains, is a step in the right direction.”


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