Are Boohoo shares worth buying after trading at the online retailer?
Poor working conditions at Boohoo factories are addressed
Boohoo has also been criticized for the poor treatment of staff at its Leicester factories. A number of ESG (sustainable) investors pulled out of the business following concerns about employee working conditions and safety issues around Covid. However, the society says it is working to make things better through its Agenda For Change (A4C) programme, which is overseen by retired judge Sir Brian Leveson.
Boohoo suppliers must now obtain independent approval on sourcing and ethical compliance.
Boohoo pulls out of Russia
Along with ASOS and H&M, Boohoo suspended operations in Russia in response to Putin’s invasion of Ukraine. However, the company stressed that Russian sales were “not significant” and accounted for less than 0.1% of group revenue.
“Boohoo is deeply concerned about the tragic developments in Ukraine,” the board said in its statement. “Immediately after the invasion, the group suspended sales to Russia and also closed its Russian business sites.”
Analysts raise Boohoo stock price targets
Following the brighter trade update, analysts raised their price targets on the shares. Broker Deutsche Bank has issued a buy rating and set a price target of 230p, while analysts at Liberum believe the shares could rise to 200p.
Shore Capital also reiterated its “buy” rating on Boohoo. The broker points to the retailer’s “structurally higher EBITDA margin” compared to other outlets, which also sell third-party brands, due to its own branding. Analysts expect the company’s performance to improve once supply chain issues ease.
“Faster delivery times remain the key competitive advantage, while the recent expansion into mid-market brands should inoculate boohoo with competitive threats,” the analysts commented. “Boohoo has demonstrated great adaptability and built a portfolio of brands (both organic and acquired) that allow it to focus on a broader market with enhanced segmentation.”
The online retailer will face continued inflationary headwinds and likely margin squeeze. However, with Boohoo shares down 70% this year, this is a speculative buy on recovery hopes.
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