Hello stock pickers!

Exciting news that Boohoo (LON:BOO) is going to save broad retail...

https://www.investegate.co.uk/...

(Note: This was a long SCVR post so put it here as better for discussion and tractability)

I don’t see why this lateral move for Debenhams brand/platform is good news for Boohoo (LON:BOO) shareholders. I think it throws shade on the strategic focus, management and corporate motivation of boo. Apologies if I’m repeating material from above but I’ve only skimmed SCVR today.

Here goes some quick points. I do not claim I have particularly good insights here and I also acknowledge that boo has had an impressive trajectory to this point:

  1. Why pick a fight with lots of other retailers on new ground when you were blitzing them on your chosen battleground with your well drilled forces? With the kicker of a long international growth runway ahead of you? Better to press down on that peddle straight ahead than distract your capital and resources with tangents.
  2. £55m for a defunct brand, website and its customer database that’s not aligned very well to your core franchise and its vibe seems quite expensive. At best its strategic diversification and at worse it's the dreaded diworsification that befits old conglomerate-empire mindset…
  3. ..Ashley at Sports Direct/Frasers is perhaps a similar comparison. He’s moved beyond his core in broad waterfront (inc Sofas, VR gaming, etc). He’s kind of saying he’s a better retailer than others and he’s got more balance sheet and time frame to sit out the interim tougher periods. I think there’s a decent chance Mike’s on to a winner...but its a tough ride and not one that is rewarded by the market in the short run.
  4. Clearly there’s name recognition and some element of implicit trust in the Debenhams label...but boo has got to make all the broad product sourcing and supply chain stuff work now as well as remarket the Debenhams brand. There’s a lot to do. Its more ground zero than plug and play.
  5. There’s an oddness in signalling around their core activities too. If the boo approach is so scalable and special then what’s going on with boohooman? Boo can double their target market given interest by youngmen in clothes that isn’t very distant from young women (and probably got a lot less returns). Why isn’t this the area of acceleration through excess capital. This is a bit of a…

Unlock the rest of this article with a 14 day trial

Already have an account?
Login here