Boohoo’s business model may be predicated on slinging out clothes at speed, but earning investors’ forgiveness has been a much slower process. Further disappointments on the back of a scandal about poor treatment of workers in Leicester were always going to burn particularly sharply. Cue a sales and margin downgrade and a double-digit share price drop.
Since last July, Boohoo’s shares have significantly underperformed its fast-fashion rivals Asos and the German group Zalando and a lower forward price/earnings multiple. But marking the shares down so severely is short-sighted.
Selling its own brands means Boohoo typically earns higher margins than Asos, at 8.7 per cent versus its rival’s 5.8 per cent for the first half of the year. But not building its business on merely flogging
