boohoo Group PLC got some hefty target cuts in the City as brokers worry that the current struggle may not be a short-lived blip.
Credit Suisse and Berenberg slashed their respective target prices to 265p from 350p and to 350p from 460p.
READ: Buy Boohoo on the dips as growth prospects remain outstanding, says broker
After many years of outstanding financial performance, the AIM-listed retailer reported some disappointing interims, where second-quarter revenue missed expectations and underlying margins dipped.
Performance was hit by prolonged lockdown restrictions (while stores were generally open), holiday restrictions, unseasonal weather and COVID-19 disruption affecting international deliveries.
It also reported a GBP26mln extra charge related to carriage and freight rates, which analysts reckon will persist into the second half.
“The key question is whether the second quarter was a short-lived blip or a reflection of structural pressures. With the newly acquired brands performing ahead of expectations (providing high single-digit percentage points of the second-quarter growth), the question is predominantly one for the group’s larger established brands such as Boohoo and PrettyLittleThing,” Berenberg commented.
“Uncertainty clearly remains and at this stage some caution about the outlook is certainly warranted. We do, however, take some encouragement from the improvement in trading over the latter stages of the second quarter and into September.”
Shares dipped 2% to 188.2p on Friday afternoon, making it a 45% drop in the year to date.
