Boohoo Downgraded on Shein Risk

Boohoo shares were downgraded on Tuesday at Davy Research after the group cited Shein’s low prices as a risk to competitors.

Boohoo was downgraded to Neutral and given a price target of 45p at Davy. The investment group also reiterated Asos at Neutral but stated that they do not think Boohoo is better positioned now that Asos has refinanced.

The group added that Shein’s low prices are enough for consumers to “look past the ESG failings,” which poses a risk to Asos and Boohoo.

But Davy was rather positive on the ecommerce retail market. Davy stated that they are yet to believe in the remarks that consumers are dropping ecommerce for high streets and that omni-consumers shop wherever is convenient. The group believes that the market is simply returning to pre-Covid trends of increasing digitilisation.

Our view:

Current Boohoo consumer happiness is split 50/50. However, demand trends such as web traffic and Google trends are on the decline, suggesting the consumer appetite for Boohoo products is still waning.

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