The boohoo.com (LSE: BOO) share price had been heading up since the start of July. But as August has progressed, it’s fallen back again.
So was it just another false start? Or could the final quarter of 2023 be the start of a long-awaited turnaround?
Those of us who’ve watched the boohoo share price plunge by 80% in the past five years will be hoping for something good. And we might, finally, get it.
Interim results
A lot could depend on how the first half of 2023 has gone. And we should know that on 3 October, when boohoo is due to post H1 results.
Right now, all we have to go on is general UK retail health, and that’s not too good.
According to the latest stats from the Confederation of British Industry, retail sales in August fell at their fastest rate since March 2021. And it seems most retailers expect another tough month in September.
That comes after a 1.2% drop in online retail sales in July. So that could well be the reason for the latest boohoo share price decline.
Light at the end?
Maybe investors are just waiting for the retail market to show some light again before they buy? By the time we see those interim figures, we should have another month’s data.
Normally, I’d look to forecasts to give me some guidance. The trouble, in this case, is that there’s no profit on the cards before 2025/26. And even then, it would be just a tiny amount. So, no useful earnings-related measures, then.
Analysts do expect sales to bottom out this year, and then start to turn upwards. That would suggest a price-to-sales ratio (PSR) of around 0.3 for the next year-end, and dropping.
By conventional measures, that could look super cheap.
Follow the buyers?
Frasers Group has been raising its stakes in recent months, so should I follow? Well, Mike Ashley’s priorties won’t be the same as mine. He might just be looking for increased market dominance, and boohoo could help achieve that.
I’m just not sure boohoo currently has the management team it needs to take it where shareholders might want.
The firm has suffered from years of PR disasters. Poor working conditions at some suppliers caused a lot of damage.
Shopper attraction
And high return rates have hit the bottom line too. The thing is, easy returns were one of the key attractions for boohoo shoppers. Buy a load of stuff, and only keep what looks good when it arrives.
Tightening returns rules, as boohoo is doing, should help stem costs. But how many of the firm’s prolific shoppers might it turn away?
I do think the boohoo share price could pick up when we see retail strength returning. And with inflation starting to drop, that might come sooner than we expect.
But I made a mistake buying boohoo shares in the past. And anther by doubling down when they fell. I don’t want to risk another one. So I’ll wait, and keep watching.
