- Boohoo’s share price witnessed a sharp plunge over the last few months.
- The firm has struggled amidst soaring UK inflation
- Also, the company encounters significant competition from rivals such as Shein.
Boohoo (LON: BOO) share noted price dips, losing over 65% this year. That saw it joining the list of worst-performing FTSE 100 stocks. Other firms within the apparel industry, such as Asos and Next PLC, have declined by over 30%from their 2022 highs.
Why Boohoo is Plunging
Boohoo is among the leading fast fashion firms in the United Kingdom. It manufactures trending clothes and sells them via its mobile apps and websites. Unlike most firths that source clothes from Asia, Boohoo has its primary operations in Leicester. There are multiple reasons why Boohoo’s share price declined within the previous few months.
First and foremost, the dip emerged after a London Newspaper revealed Leicester’s working conditions. The report attracted investigations by the United Kingdom authority, whereas the company employed an independent auditor to asset the issues.
Meanwhile, Boohoo has formed plans to combat these challenges. Indeed, the latest reports show the company improved its supply chains. Nevertheless, the stock is yet to recover.
Secondly, Boohoo’s share plummeted due to the current effects of escalated inflation in the United Kingdom. This week’s data showed the nation’s inflation eased briefly in August, though still near three-decade highs. Consequently, many prospective buyers had to trim their discretionary buys, triggering dips in most retail stocks.
Remember, Boohoo has trimmed its forward guidance multiple times in 2022, citing stalled growth. That’s a global narrative as the economy stays deteriorated. H&M disclosed that its sales surged only 3% during the third quarter, lower than the 5% median estimate.
Moreover, Boohoo faces massive competition from companies like Shein, a billion-dollar Chines firm that has dominated the fast-fashion industry worldwide.
Boohoo Share Price Prediction
The 24hr chart indicates that BOO price endured a brutal slump within the last few months. The period saw the stock plunging beneath the crucial 25 and 50 moving averages. Also, it dipped under the support of 51.35p – the 4 July low.
Meanwhile, moving below a downside trend-line meant the stock could keep plummeting, targeting the foothold at 30p. That means Boohoo transformed into a penny share firm from a fast-growing one.
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