The share price of Boohoo continues to plumb new levels as the recent supply chain issues continue to bite.
Boohoo has seen air freight and shipping charges costs climb to £26 million during the first half of the year. Rival Asos has also said there would be “notable cost headwinds” ahead, including inbound freight costs, labour cost inflation, outbound delivery costs and Brexit duty. Analysts at Shore Capital have taken a move gloomy stance saying that supply chain issues are likely to persist during Black Friday and Christmas.
Another headwind for Boohoo has been the rise of Chinese fashion house Schein. Shein is said to be exploiting a series of tax perks which allows it to be more competitive than UK firms, according to The Mail on Sunday.
The Chinese firm uses its tax advantages to sell products at a discount to its British competitors and it has become a thorn in the side of Boohoo and Asos – despite operating in Europe for only seven years.
Global sales at the Chinese firm are forecast to approach £14.6billion next year, which could eclipse some of the world’s largest retailers including Zara and H&M. In the UK, Shein’s sales are estimated at £250 million a year and rising.
The price of Boohoo slumped in September with the shares surrendering support near the 260p level. BOO has now found the 200p level to be resistance in the near-term. There is a chance that the market moves to find support at the previous support levels around 169p or 148.50p. The 200p level would then be the target for a recovery.
This post was last modified on Oct 26, 2021, 15:01 BST 15:01