Investment bank RBC cut its target price on Boohoo Group PLC (AIM:BOO) by 18% after the online retailer yesterday revealed sales were falling amid spiralling costs.
In a broker note from the Canadian bank published today, analysts cut their price target to 65p from 80p.
And said they were “cautious” about the retailer’s recovery, amid an uncertain backdrop the bank believes is only “likely to deteriorate”.
Boohoo reported yesterday revenue fell 8% in the three months to the end of May as inflation impacted its “supply chain” costs and competitiveness abroad.
However sales were still up on three years ago.
And it stuck to its outlook for the year, expecting revenue growth for fiscal year 2023 to be in the low-single digits with an improvement in growth rates in the second half.
“We lack confidence in the guided recovery in growth and margin for BOO, particularly while it operates at a commercial disadvantage compared to peers,” RBC said.
Boohoo’s revenue for the first three months of the financial year dropped to £445.7mln compared to the equivalent part of last year when Covid-19 lockdowns boosted its sales.
However, its sales were still 75% larger than during the comparable period of fiscal 2020.
Shares were up 5.04% on early trades this morning at 60.73p.