Why you should buy Boohoo Stock? (Full Business Analysis)
BooHoo is a trendy online fashion founded in Manchester, U.K.
Boohoo was originally started by the fashion entrepreneur Mahmud Kamani and Kane back in 2006.
The duo, who had previously supplied other clothing chains & were quick to spot the opportunity to sell online and in just over a decade have turned Boohoo into a £2billion Fashion Empire!
Which is worth 5 times more than Debenhams!
One of the worlds greatest investors Peter Lynch would call this stock “A Fast Grower”.
Now I’ve always avoided fashion stocks as I felt they could be easily replicated. However, after researching BooHoo it’s clear to see that this brand resonates uniquely compared to it’s counterparts.
So in this video, I’m going to give you an overview of the brand, give you a full stock analysis and tell you why I recently purchased shares in Boohoo.
LETS DIVE IN!!
BooHoo?
BooHoo had humble beginnings on a Manchester Market Stall, before growing into a £2 billion fashion empire in less than 10 years!
Now many people over the age of 26 have not even heard of the brand, but it’s styles and outfits resonate massively with teenagers and those in their early twenties. BooHoo has 5 million loyal customers in 200 countries.
There clothes are Instagram favourites appealing to those who wish to wear a different outfit each time they go out.
The clothing is also extremely cost effective with dresses from as little as £3 and shoes from as little as £4!
According to the Umar Kamani, the son of founder Mahmud:
“The philosophy is simple. ‘Girls don’t wear the same dress twice,’ Umar said recently. ‘They want a new item every week. We make sure she can afford it.’
BooHoo USP’s?
One of the principles I look for in a company is that it has a great competitive advantage.
As a budget fashion brand it’s quite difficult to keep a strong USP but Boohoo seems to have many.
OPERATIONS?
From an Operation & supply chain perspective the founders have many local contacts in the Rag Trade and thus over half of their garments are made in the U.K.
- This allows them to beat the competition by getting the latest fashion trends from Catwalk to their online store within weeks.
- Traditional Garment manufacturers with production in the far east may have lead time of many months.
- This can lead to their products been out of date by the time their clothes reach the stores.
Whereas Boohoos fast fashion supply chain tests small quantities of new lines with their customers via social media, using the platforms such as Instagram as a type of voting system.
There they can look at which clothing lines were shared a lot and had the most interaction.
Before ramping up production on the most popular units to scale.
Unlike its more ‘grown up’ competitor Asos, Boohoo sells only its own labels. It’s British distribution is handled from a massive warehouse in Burnley, which holds more than 29,000 pieces of clothing and will expand to 1.9 million sq ft next year.
Design?
BooHoo’s tracks the celebrity market and fashion trends closely, after Kim Kardashsian, Ariana Grande or Rhianna post a new outfit pic. BooHoo will have something very similar of the shelves within 2 weeks!!
They upload 120 new pieces daily onto it’s website and sells 50 dresses per minute!
BooHoo is a true leader in “Online FAST fashion” and even acquired Los Angeles based “Nasty Gal” which is of similar flavour.
Influencer Marketing?
BooHoo has a strong network of Influencer marketers from bloggers to celebrity influencers who have large followings on Instagram.
From the girl band Little Mix, to Love island stars and a host of high end celebrities such as Kylie Kenner who helped to launch Pretty Little thing.
They even roped in the Worlds Strongest man Eddie hall who promotes the “BooHoo Man” part of the fashion brand. Ran by Umar Kamani.
Motivated Employees?
I actually know quite a few girls which work at the brands of Boohoo and Pretty Little Thing (One of it’s subsidiaries).
There have most incredible Christmas & office parties with superstar line ups from Skepta to Aitch and even Fatman Scoop!
Employees can also enjoy free Zumba and yoga classes.
What about the stock?
Reviewing the stock using the Warren Buffett investment method it’s clear to see that the company has great fundamentals.
Earnings grew by over 50% over the past year (Enthusiasim )
And it has projected earnings growth of over 20%!
The company also has a strong balance sheet with greater assets than liabilities.
A companies debt level is a very important factor to check especially if investing during a recession period.
When I purchased the stock it was also undervalued due to the global issue at £1.75 per share. This gave me a margin of safety, when I invested a few weeks back.
Overall,
BooHoo is a modern fast fashion brand which is with the latest trends, has an efficient operational setup and strong celebrity connections which really do help with their influencer marketing.
In addition, the company has great fundamentals and potential for future growth.
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I would love to know your thoughts on BooHoo as a business and as a stock.
So please do comment on the youtube video!
