A 9% share price fall seems like an odd reaction to a forecast-beating trading update. boohoo (BOO) has said that its revenue growth in the year to February 2019 will be between 43% and 45% - ahead of the previous guidance of 38% to 43% - thanks to a better than expected end to 2018.
But investors are nervy and with good reason. The UK’s online retail sector was shaken in December when boohoo’s closest peer ASOS (ASC) announced a major profit warning. Excessive discounting reduced the group’s average selling price in the three months to November 2018 (before the major Christmas sales period had even begun) which contributed to margin erosion and lower than expected revenues.
boohoo’s numbers, though impressive, haven’t eliminated the risk that the group won’t befall the same fate as ASOS before the financial year (which ends in February) is over.
True, revenues in the financial year to date are well ahead of the…
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