Business & Investment

Boohoo’s stock price last October was correct.This is my plan for 2021

Last October, I I have written Works about Boohoo (LSE: BOO) Stock price. In it, I wrote about how I was bullish on the outlook, despite the short-term decline at that time. In my portfolio, it was one of my best performing stocks in 2020. But now we are in the New Year and some interesting news stories about the company are coming out again. This time it’s about acquisitions. After reading for myself, Boohoo’s share price plans for next year are:

To buy

Boohoo Announced yesterday Acquired Debenhams for £ 55m. Debenhams, a retailer that has been struggling for several years, began management in December due to the closure of the store by Covid-19. This news is getting the attention of the media, so it’s very interesting to think twice.

Since Boohoo is primarily targeted at younger audiences, this acquisition means expanding to a more mature target audience. I think this is a positive diversification. With broader demographics, Boohoo can overcome sluggish demand from specific segments and boost Boohoo’s share price in the long run.

Another reason this acquisition could help stock prices is due to the financial reasons behind it. I think the selling price is very favorable to save Debenhams. If Boohoo just robs your business of assets, you may find value that exceeds the price you paid. Access to the customer base is another intangible asset of great value to rivals. After all, Debenhams has about 300 million UK website views a month and is among the top 10 retail website traffic sites.

Of course, purchasing can be complicated and can be a bad investment to undertake.

My thoughts on the 2021 Boohoo share price

This purchase shows management’s thinking at Boohoo.They seem to want to pursue an acquisition strategy that they have already seen buying the brand Karen Millen And oasis.. This helped accelerate growth. Revenue growth since 2015 ranged from 27% to 97% annually. By 2020, revenue growth has been revised higher and is now expected to be between 36% and 38%.

Boohoo not only seeks to continue its inorganic growth, but can also benefit from its geographical expansion. For example, consider the growth of the United States over the 10 months to the end of 2020. Revenue increased 67% year-on-year. Even if there is a transaction to Europe, the business is “Small cost headwindFrom increased management and transportation costs.

As I see, the main risk to Boohoo’s stock price is due to its reputational decline. This was seen last year when poor working conditions and a bad reputation for wages led to a decline in stock prices. If more talk comes out this year about the lack of control and security, stocks could plummet again.

Overall, I’m going to buy it back to Boohoo this year. The business continues the growth strategy that has been successfully implemented in the last few years. It will be difficult to achieve the same growth rate in the long run, but for now I’m not too worried.

jonathansmith1 There are no positions in any of the listed shares. The Motley Fool UK recommends the boohoo group. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by considering different insights, Better investors than us.

Boohoo’s stock price last October was correct.This is my plan for 2021 Boohoo’s stock price last October was correct.This is my plan for 2021

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