Boohoo Shares Trade Sideways As Frasers Group Increases Stake

Today, the Boohoo Group PLC (LON: BOO) share price alternated between gains and losses after the company announced that Frasers Group had increased its stake from 13.44% to 15.12%. The move comes when Boohoo shares have traded sideways for the past two weeks. 

Sideways trading indicates a fierce battle between buyers and sellers as each side tries to gain control of the company’s share price and push it either lower or higher. Since Boohoo shares have fallen since the beginning of April this year, we could be setting up for a rally higher. 

However, the sideways trading could also be a precursor to a further move lower once sellers have taken a much-needed breather following months of bearish momentum. Only time will tell which side will win the battle to control the company’s share price. 

In its recent earnings report, Boohoo failed to deliver the positive results investors eagerly anticipated. Like its prominent competitor, ASOS, the company navigates a challenging landscape with various obstacles. 

These hurdles include supply chain disruptions, escalating operational costs, a surge in product returns, and the emergence of formidable competitors like Shein. In the face of these challenges, Boohoo and ASOS have, at times, appeared to lag behind the curve.

To mitigate these challenges, Boohoo has been taking strategic measures to curtail expenses, such as streamlining its inventory and embracing greater automation in its operations. However, despite these efforts, its international footprint may be considered insignificant. 

Additionally, with the resurgence of in-store shopping experiences, it's unlikely that Boohoo will replicate the same success it achieved in 2020.

Investors and market analysts are eagerly awaiting updates on Boohoo's US warehouse launch and any comments from management regarding the increasing stake held by Mike Ashley's Frasers Group. In recent months, Frasers Group has boosted its stake in Boohoo from below 8% to now exceeding 15%.

There are several reasons for cautious optimism on Boohoo's prospects. Firstly, the company has expressed its anticipation of returning to profitable growth during the latter half of its financial year. 

Moreover, the anticipated easing of the ongoing cost-of-living crisis and the subsequent recovery of discretionary spending may pave the way for a potential earnings surprise.

Boohoo share price. 

The Boohoo share price traded sideways after Frasers Group upped its stake in the fast fashion retailer.