Over the past five years, the ( ) share price is down a whopping 90%. In the last year, it’s down a more modest 17%, but the main theme is that the stock keeps heading lower. With a share price of just 29p and a of £374m, here’s why I’m concerned for the coming year.
Problems galore Let’s first consider some of the recent issues the company has endured, along with my outlook from here. One problem that’s still ongoing is the situation with Frasers Group. Frasers, financed by Mike Ashley, owns around 27% of boohoo.
Last month, Frasers pushed for Ashley to become boohoo’s CEO, citing needed changes and criticising the business. However, boohoo’s management team strongly rejected this claim (and appointed its own chief executive), along with making accusations that Frasers was pursuing its own self-interest. Clearly, this spat (which is ongoing) is an unwanted headache for other shareholders.
What’s more, other problems are being flagged as part of this head-butting. For example, boohoo recently refinanced £222m worth of debt. It’s argued that this was done at a high interest rate and that it wasn’t good for the business.
I already noted that net debt increased from £95m to £148m from H1 2023 to H1 2024. The digital fashion retailer needs to be really careful about the balance needed on debt. During tough times, financing’s needed to help ease cash flow problems.
But if it balloons too high, it has the potential to eat away at the rest of the company. P.
