Boohoo Share Discussion Threads

[algorithmicx] 02/9/2019 15:11

At 3 yr highs....



ASOS’s share price has plummeted this year as profit warnings, bungled international expansion and fierce competition from rival Boohoo [BOO] weigh on the stock. To make matters worse, analysts think that there’s more downside to come.

Small wonder that the former stock market darling is now one of the most shorted stocks on the FTSE 100. According to the Financial Times roughly 10% of ASOS' [ASC] stock is out on loan as traders try to profit from the online clothing retailer’s misfortune, a significant contrast to Boohoo's negligible short interest.

One of those looking to benefit is Gladstone Capital Management who have been betting against ASOS since the start of last year.

George Michelakis, founder of Gladstone Capital Management, wrote in a letter to investors: “Asos has demonstrated increasing signs of a strained business model.”

Why is Boohoo so dominant?

This year Boohoo’s market cap eclipsed ASOS’s, and now stands at £2.75 billion compared to ASOS’s £1.90 billion.

Boohoo's success is its ability to acquire distinct brands to serve different audiences, often at knockdown prices. These include Nasty Gal, Karen Millen and Coast. For example, Nasty Gal appeals to a younger audience who will buy cheaper items in bulk. While Karen Millan will offer higher priced individual items aimed at an older, moneyed audience.

This has helped Boohoo record quarterly revenue growth of 45.7% (TTM), well above ASOS's 13.5%. Things get even worse for ASOS when you compare its -87.8% quarterly earnings growth to Booboo’s 22.6%. Boohoo appears to have the rivalry sewn up, with this year’s profits forecast to be double that of ASOS.

How do the share prices compare?

Back in late April, ASOS and Boohoo's share price were both trending upwards for the year. Since then, the two stocks have experienced vastly different fortunes.

ASOS stock is up just 0.42%, which compares poorly with Boohoo's huge 50% gain. A particularly bleak moment was 17 July when ASOS stock dropped a massive 23% following its second profit warning in the space of seven months. The warning revealed ASOS expected to make between £30 million and £35 million in 2019, a third of last year’s take and well below the City’s forecasted £55 million.

[christh] 02/9/2019 15:03

Guru is still shouting louder and louder

Results not far away , 25 September
Already very bullish on the results after the trading update that we had
Still confident we will get to
300p-325p range.

[grahamnash] 02/9/2019 13:18

Hi AX. I take your point, but was wondering if the perception of ASC as a low margin business (albeit, a large one) was depressing the share price

[guruofcanada] 02/9/2019 13:14

Snap election on the cards. Brexit party could see big wins which might spook the market.

[algorithmicx] 02/9/2019 12:42

It means they have to force suppliers to reduce their prices by 3%

[grahamnash] 02/9/2019 12:34

Hi Guys. Been following the Boohoo versus Asos to and fro. What about margins? Boohoo 10% while Asos 1% (I believe). With Debenhams, Carillion, Kier coming croppers partly as a result of low margins restricting the room/time for manoeuvre, would this be having an effect on ASC??

[guruofcanada] 02/9/2019 10:41

ASOS is primed for new growth. They have put many plans into action, hence why they had to issue profit warnings for this year - they spent a lot. Boo hasn’t achieved the same planning, and the KM purchase is not going to have any immediate effect. I do think that purchase was more about solving the pending trade problems, though. The brand is just another string to the bow. You said a key word “squeeze”;.....and that’s all you can do when the share price is already at the top of the PE curve. There comes a point where even PIs see that it’s overvalued. ASOS is at 24, this is showing 73 after the fall today. It won’t get a rerate until next year. It will take several years of growth to be worth the £3 figure that people seem to think it should be priced at today! There’s a huge difference.

[slogsweep] 02/9/2019 10:27

guru 15603

ASC PE forecast 78 for 2019
BOO PE forecast 46

markets look ahead and BOO is still growing whereas ASC growth has stalled

made a lot on both but now only hold BOO where I have already recovered initial stake and a decent profit

Yes the best days are behind us but still expect to squeeeze a bit more unless a better prospect turns up

[guruofcanada] 02/9/2019 09:53

Another alias......love it! 2 posts in total and ONLY focused on me!! Reveal your true identity!

[10helen] 02/9/2019 09:26

Yawn, yawn

[guruofcanada] 02/9/2019 08:40

That was an easy drop to 232. That’s the problem when it screams overpriced, the fall is often much much quicker

[guruofcanada] 02/9/2019 07:52

Fast fashion waste coming back to haunt boo. If brexit wasn’t the fashionable debate then the focus on the environment would be.

[guruofcanada] 02/9/2019 07:49

Great opportunity to open a short coming. Highly overvalued PE now at 76. Read simplywall.st assessment of value. It might be a good company but PIs are the poor ones to get burned when it’s overpriced. ASOS still has a PE of circa 25!

[christh] 31/8/2019 02:36

Results due in 3 weeks time, has sparked buying that will increase the coming days
Sales in Boohoo have rocketed and the results will prove what a robust company is.
Expect 250p next week, as it has hit nearly 245p yesterday.
Keep the candle burning, a good solid investment, high growth, great future.

[hootza616] 30/8/2019 23:36

Anyone have an opinion on why Quiz share price was up 15% today?

[algorithmicx] 30/8/2019 17:10

It has not helped that Asos’s annus horribilis has coincided with a purple patch at Boohoo, another UK online fashion retailer whose shares have gained more than a third over the past year.

[christh] 30/8/2019 16:10

Shorters make sure you close your shorts, the share price is heading upwards
The interim results are on the 25 September

[algorithmicx] 30/8/2019 13:16

Richard Watts, manager of the Merian UK Mid Cap fund, is one who takes this view. He tells Telegraph Money how Boohoo is changing fashion and how he’s making sure he doesn’t repeat Neil Woodford’s mistakes.

What has been your best investment?
Definitely Boohoo, the online clothes retailer. We bought it when it listed in 2014 and its share price was about 50p. We added more at 30p because it dropped and now it’s trading at about 235p. It’s the biggest holding in the fund.

In focus: Boohoo
Boohoo, a shopping website, listed on the London market in 2014 and has since grown its share price by about 370pc. The business is involved in fast fashion and designs its own clothes.

It continues to have enormous growth potential, selling good designs at affordable prices. Its global market share is very low, leaving it plenty of opportunity to continue growing.

[guruofcanada] 30/8/2019 12:11

Hahaha christh you are entertaining sometimes. You just invent your own stuff.

[christh] 30/8/2019 12:01

The chart is pointing upwards...towards 250p and higher.

Get your glasses on....

[algorithmicx] 30/8/2019 11:53

Charts suggests it has entered overvalued territory. With such a high PE they need to report stellar growth, but I would not be surprised if John L makes a cautionary statement about the effects of a hard brexit. In comparison to ASOS boo has done little to prepare - KM purchase won’t be beneficial for some time. A breakout on the share price would only be PI hype and burn the unseasoned investors.

1. Overvalued - This is based on personal opinions - your thoughts are just perma negative
2. Stop the waffle (Boohoo is the one of the leanest well run online machines out there) - they're stomping on everyone
3. PIs can't move share prices - this is a multibillion entity and you think PIs move the share price? learn how SETS and NEX works

[guruofcanada] 30/8/2019 11:46

Charts suggests it has entered overvalued territory. With such a high PE they need to report stellar growth, but I would not be surprised if John L makes a cautionary statement about the effects of a hard brexit. In comparison to ASOS boo has done little to prepare - KM purchase won’t be beneficial for some time. A breakout on the share price would only be PI hype and burn the unseasoned investors.

[algorithmicx] 30/8/2019 11:29

Results will be an earnings beat, we'll get upgrades and remember Boohoo is taking market share from everyone bricks and mortars and former online darlings such as ASOS.

This will be £3+ after results and also expect a solid run-up. The weather has been fantastic, so sales will have been fantastic

A 3 yr breakout also expected for those TA gurus who just just draw lines all day