The Boohoo Group PLC (LON: BOO) share price is down 17.1% since its half-year earnings results on Thursday, September 30, 2021, narrowly missed analysts' estimates.
The eCommerce fashion retailer generated £976 million in revenues during the period, a 20% improvement to £816.5 million reported in H1 2020. However, the figure fell short of analysts expectations of H1 sales worth £1.05 billion.
However, Boohoo’s earnings fell 5% to £85.1 million compared to last year’s £89.8 million. The retailer’s pretax profits fell 20% to £63.8 million from last year’s £79.4 million, triggering the massive selloff.
Most analysts and investors expected the reopening of brick and mortar stores to affect Boohoo sales significantly, but that did not happen as the retailer generated 20% more sales as outlined above.
Some of the report’s highlights included Boohoo’s expanded distribution capacity after acquiring Debenhams earlier this year. The firm claimed that its US and UK supply chain could support up to £4 billion in sales annually.
Boohoo also doubled its market share over the past one and a half years within the US and the UK, with sales growing 73% since H1 2019.
The retailer noted that its underlying margins were under pressure due to disruptions caused by the coronavirus pandemic lockdowns and travel restrictions. The management team said that it expects the impact of the disruptions to last till the end of the year.
The online fashion retailer also noted that its capital expenditures for the year were set to increase by £25 million as it continues to invest in its operations.
Investors were not pleased by the two significant headwinds facing Boohoo, contributing to the stock’s decline.
Meanwhile, investors may be wondering whether Boohoo shares have bottomed and if now is a good time to buy. The good news is that BOO shares are trading above the crucial 200p level, which seems likely to hold, providing a bottom for the stock.
I would wait for bullish daily candles before jumping in to minimise the stock’s likelihood of falling further. However, nothing is guaranteed in the markets.
*This is not investment advice.
Boohoo share price.
Boohoo shares are down 17.1% over the past three days to trade at 211.95p, falling from a high of 255.70p on 29th September.
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