Boohoo ‘Core Brands Continuing to Decline’

In a note this week, online fashion retailer Boohoo (LON: BOO) was downgraded by Jefferies to “Hold” from “Buy,” citing ongoing challenges with its core brands.

Analyst Andrew Wade has also slashed the firm's price target for the stock to 30p, down sharply from 70p, reflecting a cautious outlook for the group.

Jefferies highlighted a decline in both sales and profitability across Boohoo's core brands, compounding the company's struggles.

While the Debenhams operation has shown potential, they note its contribution remains relatively small, offering limited relief to the broader business. Wade noted, “We worry this may not be sufficient to justify upside.”

The downgrade comes amid financial pressures for Boohoo, with a recent £40 million capital raise still leaving questions about its ability to address an impending term loan repayment next summer.

Jefferies suggested that brand disposals or the sale of its Soho property could be necessary to bolster funding.

The firm also revised its estimates for Boohoo's financial performance. Forecasted FY25 EBITDA has been reduced from £66 million to £46 million, with anticipated losses for FY24 and FY25.

Boohoo's struggles underline the challenges faced by fast fashion brands in a competitive and cost-sensitive market.

So far this year, Boohoo shares are down more than 17%, although the stock made a more than 5% gain in Thursday's session. At the time of writing on Friday, it is down 0.9%.