Online fashion retailer boohoo is expected to perform better than feared following Next’s results, say Shore Capital, although still weaker than its multichannel competitors.
Consumer demand “seems to have been solid” over Christmas despite the cost-of-living squeeze, said the broker.
Next’s results also showed that online appears to be back on trend and will continue to increase its penetration against the physical channel, Shore Capital said.
However, multichannel businesses might have been preferred to pure online players over the festive period, which coincided with postal strikes.
Postal strikes also played into return rates coming back to bite, causing an increase, especially for those deliveries that didn’t make it in time for the key holiday dates.
Analysts at Shore, therefore, stress that while trading may seem robust when boohoo next updates the market, return levels will be critical.
On a positive note, the broker believes Black Friday was particularly strong for the AIM-quoted retailer, which rewarded loyal customers with further discounts before the last Friday of November and maximised profits with the casual customer thereafter.
Shore Capital kept its 'hold' rating on the stock.