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Boohoo (BOO) down 2% in London despite record earnings
Boohoo (BOO) posted record earnings on Wednesday as its sales soared 41% during the COVID-19 pandemic, but the online fashion retailer’s shares still closed 2% lower in London.
For the 12 months to 28th February 2021, Boohoo reported a 37% spike in adjusted earnings before tax of £173.6m versus the £126.6m recorded a year ago.
Group sales, buoyed by strong demand for loungewear and activewear across its younger user demographic, also rose by £500m to £1.7bn.
Like rival ASOS (ASC), Boohoo benefited from a year of uninterrupted trading, unlike traditional retailers, and its recent acquisition of Arcadia group brands including Dorothy Perkins and Burton.
Chief executive John Lyttle said that the new additions are currently being “re-energised” to ensure that they appeal to a broader audience, but that they were already driving growth.
While Boohoo’s numbers were impressive, there are still questions about the company’s supply chain after an independent review published last year said that its employees were often made to work in poor conditions for low pay.
Third Bridge analyst Harry Barnick believes that Boohoo needs to be “whiter than white” to restore its reputation.
He said: “Boohoo now has the complex job of cleaning up its global manufacturing practises while ensuring it retains its competitive edge as the fastest and cheapest player in the market.”
Looking ahead, Boohoo said that it was encouraged by trading in April following the easing of the lockdown and COVID-19 restrictions in the UK.
It also forecast a 25% increase in revenue for the new 2021/22 financial year.
Doubts still appear to be lingering for investors though, as Boohoo shares slipped into the red in London on Wednesday and eventually finished down 2.49% at 318.37p.
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