Clothing companies have performed poorly in London as they continue facing numerous demand and supply challenges. Boohoo share price is loitering near its lowest level this year having fallen by 83% from its all-time high. Other companies in the industry like Burberry, Asos, and Next PLC have also plummeted hard this year.
Why has BOO nosedived?
Boohoo was once a favorite among London investors as its phenomenal growth continued quarter after quarter. The love continued during the pandemic as more people shifted to online shopping. At the time, the stock jumped to an all-time high of 430p, giving it a market value of over 4 billion pounds. Today, Boohoo Group has a market cap of less than a billion pounds.
Boohoo’s sell-off happened after the company published weak financial results and forward guidance last week. The firm expects that its full-year sales growth will be in low single digits. This implies that the company is no longer a growth stock. The firm also expects that its profits will be significantly lower than where they were last year.
Boohoo is also facing additional challenges. Shein is disrupting its business dramatically by selling cheap clothes sourced from Asia. To address some of these challenges, the firm is now widening its sourcing to places like Turkey and North Africa. It is also planning to increase prices, which will affect its overall growth as customers opt for its competitors.
Still, this sell-off has left a company that is significantly cheap. It can also be a good turnaround stock while chances of it being acquired have risen recently.
Boohoo share price forecast
The weekly chart reveals that the BOO share price has been in a sharp sell-off in the past few months. The stock dropped to a year-to-date low of 64.06p in March. Now, it is attempting to retest this level, which is now a good support. The stock is sharply lower than its moving average while the Ultimate Oscillator has been rising. A closer look reveals that the Vortex Indicator has eased.
Therefore, there is a likelihood that the stock will drop and retest the support at 64p. In the long-term, the shares will likely rebound since this support seems like it is a floor.
