Updates

Boohoo - Mid term aspirations imply an EBITDA of £120m against a market cap of £500m

June 2023

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Latest results from BOO were on the right side of consensus, with sales of £1,769m, down 13% at constant currency. However, gross margins were down 1.9%, reflecting Covid-related cost pressures on raw materials, freight and stock clearance. EBITDA came in at £63.3m, surpassing the consensus estimate of £62.1m. This translates to an EBITDA margin of 3.6%. Inventories decreased by 36% or £100m in absolute terms, aided by increased near-shoring and working capital improvement. This resulted in a free cash inflow of £30m. BOO ended the year with £6m net cash, contrary to forecasts of having debt of over £50m. Currently, the group has £325m of undrawn liquidity headroom. Operationally, significant achievements were made, includ ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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