The boohoo (LSE: BOO) share price rose by almost 14% last month. So perhaps that relentless slide since 2021 has finally ended for the stock. If so, investors will be looking for evidence of a turnaround in the underlying business — one that can drive further share price gains ahead.
The early signs are encouraging
The good news is the firm seems to be putting in place the building blocks for a recovery. So it may be a good time to tune in to the business now that November’s price spike has grabbed our attention.
But what’s behind November’s decent stock price performance? Well, I reckon one of the most important factors might be that boohoo announced the appointment of its new chief executive.
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During October, Frasers Group made a failed attempt to get Mike Ashley appointed to the role. Ashley’s the majority shareholder of Frasers which owns a big chunk of shares in boohoo.
However, on 1 November, boohoo announced the appointment of Dan Finley to the chief executive position, with immediate effect.
Finley was promoted internally from being the chief executive of Debenhams, boohoo’s “fast-growing” digital department store.
Deputy chairman Alistair McGeorge said Finley is an “outstanding” leader in a new generation of digital retailers. Before Debenhams, he had a track record of “phenomenal” success in online retail during 10 years with JD Sports.
I reckon change at the top can be good for most businesses. New managers often bring with them enthusiasm and determination. So Finley’s appointment may be the beginning of better times ahead for the boohoo business.
A new strategy
Following that news, the company issued its half-year report on 13 November. In that, Finley outlined his plan for boohoo. He said that in the three years he’d been with the company he transformed Debenhams into a “highly profitable, capital light marketplace business”.
“We have had huge success with Debenhams,” Finley said, and now he’s looking to extend that across the entire business.
Then, on 18 November, the firm announced it had conditionally received total gross proceeds of around £39.3m from a placing, a subscription, and a retail offer.
Finley said the funds will support the business through its next phase of growth. However, in December, the company announced it had paid off £50m of its bank debt.
Nevertheless, during November, boohoo established new management, new finance, and a new plan — all good ingredients with the potential to kick-start a turnaround.
However, there’s still huge risk here for new shareholders. For a start, the business is still in the doldrums and loss-making after all the widely reported challenges that crashed the share price in the first place.
On top of that, there’s the ongoing threat from competitors such as Chinese fast-fashion business Shein and others.
But the down-trend in the stock has stopped for the time being. The developments in November and the surge in the stock price are significant. So I think it’s a good time to become interested in boohoo again.
Like other investors, I plan to monitor the firm’s progress and expand my research with a view to considering the stock for my portfolio.
