Boohoo still recovering from sweatshop scandal but lockdown boost keeps it financially robust
Boohoo’s expertise as an online clothes retailer quickly made it one of the ‘lockdown winners’ last year.
Sales boomed and profits rose by more than a third in 2020 – although a sweatshop scandal that exposed its use of Leicester manufacturers that paid workers far below the minimum wage sent its share price plummeting last July.
The stock has still not fully recovered but the lockdown boost has kept it financially robust. It releases a first-quarter trading statement on Tuesday that will show whether the easing of restrictions has dampened online demand.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: ‘We wonder if revenue growth has slowed at all. We suspect high street footfall is still subdued, so all else being equal, Boohoo may well surprise on the upside.’
Analysts will be keen to know how sales of Wallis, Dorothy Perkins and Burton items have fared, after Boohoo bought the three brands from the administration of Sir Philip Green’s Arcadia group earlier this year.
The City will want an update on its US arm, as this is seen as the next big growth market. Lund-Yates said investors will be ‘reading any commentary surrounding the supply chain review very carefully’.
This will include seeing if Boohoo sticks to a plan to publish its list of global manufacturers in around three months’ time – a transparency measure which will be the key to restoring its reputation. Shares rose 2.2 per cent, or 7.1p, to 329.9p.