BooHoo (BOO) Discussion Thread
There's been a lot of discussion about Boohoo (LON:BOO) (I hold) over the years in the Small Cap Value Reports here on Stockopedia. Since the market cap is now over £4bn, hardly a small cap, I thought it was overdue to set up a separate thread.
News & views -
9 April 2021 - Update on Warehousing
boohoo, a leading online fashion retailer, is pleased to announce that following exchange of contracts, it has agreed a long-term lease for a new warehouse in Daventry, due to become operational in the second quarter of the Group's financial year. This site will support the Group's expansion and adds capacity in addition to its existing facilities in Burnley, Sheffield and Wellingborough. In aggregate, these sites will give the Group net sales capacity in excess of £4 billion.
The new warehouse is scalable, with the Group expecting to invest over £50 million in the coming years, increasing capacity and offering the Group operational flexibility as it grows. The deal is expected to secure up to 500 jobs and in the future create up to a further 1,000 jobs as capacity increases at the site.
My opinion - I think this shows the scale of the group's ambitions, and the significant growth in the pipeline - strong organic growth from existing brands, plus the new brands recently acquired (e.g. Debenhams & others).
For context, revenues for FY 02/2020 were £1.24bn. So planning for revenues of >£4bn is a step change in size.
In my opinion, forecasts do not yet adequately reflect the growth in the pipeline, which could lead to a re-rating of BOO shares. Together with the decisive action being taken to address ESG concerns, I think there's every reason to be optimistic about BOO's future prospects.
Views?
Regards, Paul.
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48 comments
Boohoo (LON:BOO) noticed that II's are investing again with T. Rowe loading up with 10% holding, think Boo is set to return to higher levels towards the end of 2021.....? thoughts anyone
Yes this was reported a few times last Friday, I thought the shares may have gone up more today.
For Debenhams, the sub-brands were a way of disguising the fact they were own label as well as some genuine differentiation between them. I doubt Boohoo need them and they would only use them if there were a strong positive brand consciousness in customer's minds.
So Boohoo buying a London office block.
I remember Laura Ashley bought an office block. Though that never made business sense.
I suppose, if you're going to buy an office block in London, now ought to be a reasonable time to get an advantageous price. And hard to persuade Londoners to move to Manchester.
Well it certainly seems like a reflection (along with the recent warehouse announcement) of a company expecting to continue rapid growth. It also reflects the widening range of brands and indeed businesses, eg the new Debenhams website will soon have beauty and grooming offerings along with household goods.
There is a lot going on; it will be fascinating to see how £BOO manages brands to ensure they are supported and developed, and indeed not contaminated. Recent issues about same items for sale on very different brand websites, suggest that this is a risk to be carefully managed. The media have helpfully brought this to the fore (no irony) I think this has been an important early warning for Boohoo (LON:BOO) .
It is also interesting and potentially canny, that £BOO appear to have ditched all of the myriad sub brands that Debenhams used for clothes and instead appear to be just using the Debenhams own brand. Reinforcing a single strong brand, rather than running with numerous weak brands makes a lot of sense to me.
I see Boohoo (LON:BOO) have launched the new Debenhams website with men and women’s clothing and accessories, including the first (few) Dorothy Perkins and Burtons items. Beauty, grooming and household to follow...
So this means that the now it’s just the stores to open today and sell off their remaining product, then they will all close....so by the time of the results presentation the handover of Debenhams brand will be complete.
Paul,
I like the separation of Boohoo (LON:BOO) not least as there often seems to be plenty to talk about!
However could I make a suggestion:
Instead of this single company focus what about a fashion retail page?
In reality you/we often also talk about other retailers, eg Next, Asos, Joules, Quiz alongside boohoo. Discussing these companies in the context of each other and the wider industry is in my view both interesting and relevant.
I’m not suggesting more work on your part as you comment on these companies anyway, just that the discussion board brings them together.
Thanks for considering
Martin
Actually, I think this is a good idea, you can add Sosandar (LON:SOS) as well.
Good point, I forgot Sosandar (LON:SOS) - all together it’s an interesting business area, with lots going on and Paul’s background in it brings a helpful perspective.
Boo!!
I sold my boo shares on the day of the Liberty/CBP controversy, not because of ESG concerns (I personally think boo are the good guys of ESG), but because I think the political aspects of a CBP enquiry are dangerous.
My plan is to buy back on further newsflow, good or bad.
I didn't like boos comment about 'not being aware' of an investigation. I would have preferred something along the lines of 'we were on the phone to them this morning and will do everything we can to put this to bed ASAP'.
My question is how long do you think it will be before this issue is resolved one way or the other? The CBP Palm oil enquiry took about 3 months I think from initiation to sanctions. Is it possible neither boo nor CBP will comment further and the issue will just fade without an official closure?
I thought that when pressed the US did not confirm any investigation. Instead the headlines were based on Liberty asserting that they had sent sufficient material to the US, in their view, these materials were sufficient for US to make an investigation...it’s not at all clear that the US agreed, or want to dance to Liberty’s tune.
Exactly, I thought the Liberty release was very carefully worded. It seemed to imply that the CPB had acknowledge that they had enough evidence to start an investigation, but in fact that wasn't stated. Almost certainly Liberty were saying they considered the evidence sufficient, something very different.
Thanks for replying. As you point out the question of whether cbp has actually launched an investigation, or just been asked to, is crucial. This article in the Guardian says 'US authorities have launched an investigation.....'
https://www.theguardian.com/business/2021/mar/02/us-should-consider-ban-on-boohoo-clothing-says-charity
This ambiguity is why I find boo's response inadequate. Presumably boo must have contacted cbp to establish whether or not there is, or will be an investigation? Maybe boo's response of 'not being aware' was their way of trying to say they don't want to dignify the story - but if that was the case why comment at all? They never commented on the Dispatches claims. Also the fact that there has been no further press coverage suggests that maybe you are right and cbp is taking no action.
Personally I am going to give it 3 months at least but eventually I will have to buy back - maybe me buying will be the trigger for an announcement?! That will teach me to tinker!
Boo said "the Group has not received any correspondence from, nor is it aware of any investigation by, US Customs and Border Protection ("CBP")."
If the CBP was in the process of undertaking a review of Boo's operations they would have had to contact them for records. They wouldn't rely on what Liberty sent them. If they had not started one, or were in the very preliminary stages they would likely refuse to answer a request from Boo. And actually from Boo's point of view ringing up CBP and asking - "are you investigating us" might not be a very clever response.
So I can't really see much wrong with Boo's RNS.
This ambiguity is why I find boo's response inadequate. Presumably boo must have contacted cbp to establish whether or not there is, or will be an investigation? Maybe boo's response of 'not being aware' was their way of trying to say they don't want to dignify the story - but if that was the case why comment at all?
It seems reasonable that they would repond to an article connecting them to slavery the fact they may not have answered other idle tittle tattle doesnt mean that there isnt a line which when crossed deserves reponse.
The obvious possibility here is that complaint is made - investigation into complaint is openened up - story is generated confirming this fact - information provided is looked and not deemed worthy of further investigation so boohoo never has any case to answer. I don't blame boohoo for not going looking for stuff that might not be worthy of response and might be spurious particualry if the likely answer from the authorities will be "you will here from us when you here from us IF you here from us" if they were to aks them.
The clever part of the news story is the wording that simply says "launch an investigation" - they can't really decide there is no case to answer without doing this when the allegation has been made now can they?
"US Customs and Border Protection has seen enough evidence to launch an investigation after petitions from a campaigning British lawyer."
It seems all too convenient that it almost sounds like the article could have been written by Liberty shared. Being frank the whole Liberty Shared case is a bit weak and lacking in any meaningful evidence that boohoo condoned slavery - is it boohoo's problem if the relevant authorities don't do their job ? according to Liberty yes - and whole situation seems to ignore the reality that boohoo have themselves gone to the touble of taking action to address these issued before teh complaint was made - they are using the contents of the action boohoo have taken to stop this situation existing against them as proof that tey are guilty - hmmmmm
so whilst not knowing how this will pan out i am certainly not presuming boohoo has any case to answer here just because a complaint has been made and someone thinks this compain nees to be looked into.
A single UK Distribution Centre is the way to go, not this fragmented approach to DCs in a small market like UK. Operational inefficiencies will be the inevitable result. These actions point to chaotic growth. Equally importantly, if not even more so, ... a European DC is needed to service Europe with shipments coming directly in from Asia sources.
I'm not sure that's correct. Remember Boohoo (LON:BOO) (I hold) is a multi-brand group, with 15 largely separate brands. Therefore if you stick them all in one warehouse, that could be less efficient, because there would be so many product lines, that picking the product for each customer order could entail very long walks. I seem to recall warehouse staff complaining that they walked about 20+ miles per day picking items as it was.
Then there's warehouse automation to think about. BOO is spending big on this, and it greatly increases efficiency.
There's also the option of using outsourced distribution companies like Clipper Logistics (LON:CLG) - I believe Asos (I hold) use them for returns, for example. BOO could very easily do the same thing for EU & USA, maybe they are already I don't know?
Overall, I just wouldn't worry about it. BOO management know what they're doing, and have far more experience of all aspects of running the business (including logistics) than any of us. There's a tremendous amount of expertise in the group, particularly after 3 top brass came in from Primark. So they know how to source responsibly for low cost overseas, and they know all about logistics. Their marketing expertise is second to none, and the product hits the nail on the head, that's why organic growth is something like 40%.
Regards, Paul.
Hi Paul & others
As this thread specifically addresses online fashion retailers, I wonder if any others have looked at the German based £ZAL Zalando Se? (I hold).
It seems that in recent times £ZAL has really pulled ahead of both Boohoo (LON:BOO) and £ASC.
£ZAL red, Boohoo (LON:BOO) candles, Asos (LON:ASC) Grey (daily chart).
Interestingly, £ZAL and Boohoo (LON:BOO) seem to track until Boohoo (LON:BOO) fall in July 2020 then a second fall Oct 2020 (ESG issue). Now Boohoo (LON:BOO) and Asos (LON:ASC) are tracking closely, but £ZAL noticeably higher since the pull away from July 2020.
Obviously £ZAL has a much larger market cap but I think it interesting to assess two UK based online fashion retailers versus a EU based competitor (who is addressing the whole European market).
Regards
Howard
Not sure what period that chart covers but ASOS (LON:ASC) is up over 140% in the last year.
Boohoo (LON:BOO) is up 28% and ZAL is up 113% based on Stockopedia figures.
Hi Herbie
From Jun 2019 (I think it was). I had not noticed the Stocko share had chopped off the timescale. My apologies.
Regards
Howard
Not sure what period that chart covers but ASOS (LON:ASC) is up over 140% in the last year.
Asos is also up only 70% over the last 2 years !!! (i am not saying thats shabby) - so i would say alot of the "bounce" in the last 12 months is just them making ground back ground that they lost the prior year. Over 2 years boohoo has done better than asos (just)
I notice that posters comment on the recent media coverage with regards to Boohoo and clearly there are some different interpretations with regards to the coverage. However, putting emotion aside, if you look at the chart there is clearly a wedge shaped pattern formed over the last year, the volume has also steadily decreased, I have very little understanding of the technical analysis of stocks but this clearly looks like a pattern where something looks likely to happen?
OK, good idea, but please lets not have one thread for all the Boohoo comments ever. Start a new discussion every time there is some news. e.g. Boohoo warehousing announcement, Boohoo final results, BBC reports Boohoo selling same items across different brands.
Yes good idea, I wasn't sure how to structure it, but a new thread for each bit of news from BOO sounds sensible, then it's easy to check back on specific topics.
Could possibly use the 'Blogs' feature as a logical grouping for Boohoo (LON:BOO) updates - as well as other Fashion / Retail stuff, as a previous commenter noted? That would be a nice way to relate stuff together and declutter the main SVCR.
Either way, once posts are tagged properly they will appear in the Discussions tab for each company, which is the main thing I think. Great stuff!
I took this morning's RNS as a huge sign of intent - and where they think the new acquisitions can go. I take the points about Europe and the US, but I don't for a moment think management will not have had that high up in their list of considerations. Is it unreasonable to think that £4bn+ sales is the future ambition for the UK alone, setting aside what is already impressive growth in the US?
Good idea, hopefully de clutter the SCVR. Having converted 100% to the new site, its dead easy to know when a new post (on any thread) has been made.
I always go Discuss > All Posts, and the recent active threads float to the top with the number of new post I haven't read against them. The new posts are ringed in a box, so easy to find....simples.
Thank you for this. I will try this out.
Does anyone know how Boohoo (LON:BOO) is handling post-Brexit customs issues in the EU and have any sense of impact? This is not entirely unrelated to today's news as this is about lack of warehousing in EU. Not being able to understand any impact has reduced my enthusiasm for purchasing more shares this year (I currently hold).
In January the company told the Irish Examiner: "Depending on the value of your order, your boohoo parcel may or may not be charged customs or import duties. If your parcel is charged, it is up to the person receiving the parcel to cover these costs.
Unfortunately, these charges are out of boohoo’s hands, and vary widely from country to country, so we’re unable to predict what your particular charges may be.”
ASOS on the other hand said “If you’re placing an order for delivery to an address in the EU, you won’t have to pay any new customs duties or import taxes, as we will ship to that address from our EU-based warehouse.”
The upshot is I am a bit concerned that custom/import charges and paperwork faff for customers may undermine European growth. Non-UK Europe sales currently account for 15% so it's not an insignificant issue if the company takes a hit there.
Strongly agree re the warehousing. It is very difficult to understand why Boohoo (LON:BOO) does not have warehousing in the US and particularly, post-Brexit, in the EU.
I agree instead of new warehousing in the U.K. they should have some in the EU and the USA. Many orders to the EU will be rejected as the additional costs will be too high, many items won’t even get back to Boo.
Brexit is causing real issues for people, on Both sides.
Either they're still working it out or are negotiating. Or just observing before committing.
With so many fast changing lines its not a simple issue. Most production is in the UK, so export would still be required even if they had a warehouse in the EU. Increasing overseas manufacture is another possibility. And having a facility in another country would be a further stretch for management.
I suspect there'd be quite a few diseconomies of scale in trying to have a full size warehouse in the EU for the moment. A sorting office and posting centre would be an alternative.
Yes but if the customer is based in the EU and the goods are in the EU, then there will be no customs handling fees to pay by the customer. Some of the custom fees and handling charges are quite high in certain EU countries. So unless Boohoo (LON:BOO) wants to lose a lot of custom to ASOS (LON:ASC) I think it needs to address this issue promptly.
It has stopped a lot of people ordering goods from the UK.
The Boohoo French website now says:
Customs charges and taxes for deliveries to Europe will be paid by boohoo.
When returning an item to us, please make sure you send it through our returns portal. There you will find our European return address, so you do not have to pay any export costs when returning. If you do not use our returns portal to return your items, you will be responsible for the return and your refund may be delayed.
But the thing that stands out to me is that standard delivery takes up to 7 days at €3.99 per order or express delivery in two days is €15.99 per order. I guess they have been busy with their supply chain but I really would have expected their next warehouse to be in the EU.
On the actual subject of Boohoo (LON:BOO) (I hold) this was my conclusion when they announced the Burnley centre which has a capacity for £3bil.
ESG won’t go away but think Boohoo are doing more to address it than most but in the process investors don’t seem to be able to get beyond it and focus on what matters once the ESG issues are sorted: the scale, the growth, the margins, management and the business model.
Even Zeus are only forecasting £1,691.5m for FY 2021, which by my calculations is out by a factor of 10% to 20%. Well all will be revealed on 5th May (https://www.boohooplc.com/investors/financial-calendar)
It will be interesting to see how this moves over the next few weeks. 350p being the current resistance followed by 380 and the 400 barrier.
Good move Paul, I actually used to scan the SCVR’s for Boohoo (LON:BOO) comments, will be able to just check back here now.
Personally not a fan of the move as I enjoy your musings on Boohoo (LON:BOO) (I hold) and the comments it generates and indeed on any stock eg Next (LON:NXT) and having them all in one place is easier but if this is what readers and Stockopedia want so be it but will we be able to receive an email notification when you post here as we do with SCVR?
Have asked for this on other columns Ed Shings “Musings...” for example but for some reason it is a no go.
Thx
Regards
Michael
I can flag up in the SCVRs if there are interesting musings here. Or you could just bookmark it. Active threads show up in the discussion area, and you can play around with the "most popular" and "most discussed" buttons at the top, to flag up interesting threads.
It would be good to broaden more discussions out onto their own threads, as the SCVR is too cluttered I think.
Paul, Fine to have a separate thread, but I agree with Michael - the flagging up of new content is key. No point having great content if the audience drops significantly. You suggest "bookmark" it, I assume meaning just yet another bookmark on your browser? but that does not notify you of new content, does it? My guess is that for people who read your interesting and informative material, the daily SCVR e-mail is the prompt to read new posts. So seems to me that to keep the readers reading, flagging up in that daily e mail is essential
qvg,
I've already said that I'll point out new posts on BOO in the SCVRs. Relax, it'll be fine! ;-)
Paul.
I like the way this and the discussion area on Stocko is going. Hopefully it will develop into a similar discussion quality that was available on the old Motley Fool site
That would be very useful.
Personally I think it is only cluttered in the way that a newspaper is cluttered. Lots of information about lots of interesting companies in one place. :-)
Thx.
I agree Michael, perhaps Stocko will consider adding a Follow/Subscribe feature to posts. Paul will hopefully link from the SCVR to signpost updates due to boohoo news anyway.
Geneally I like the idea, it should mean it becomes easier to keep track of boohoo chat and avoid unhelpful debates on the SCVR posts,
I should have added that it is surely less likely that we will bear comments here because the bears won’t visit this page?
Good point that Michael. Only those interested in the stock (holders and potential holders) will follow the thread. Be interesting to see the number of bear comments over time. It's difficult to take the alternative view when you hold, as we all know?!
If I've learned anything from reading financial history, it's that reducing exposure to countervailing opinions always, always, improves performance.
Best of luck to holders.