Boohoo Group PLC (AIM:BOO) will "struggle to reinvigorate growth”, said analysts at Liberum, which has a ‘sell' rating on the stock and a target price of 35p.
The broker is not convinced by the online fashion retailer’s hopes of achieving pre-pandemic growth and margin rates.
Liberum said the group has not gained much market share in the UK online clothing space in the last three years and has lost ground in the US to Shein and in Europe to online marketplaces.
Boohoo’s plans to open further local distribution centres in the US add to concerns it will struggle to reinvigorate growth, said the broker.
Liberum notes that the cost pressures boohoo has faced, including higher warehousing, freight and marketing costs, could soon become tailwinds.
This is due to costs potentially decreasing, operational improvements and automation, among other factors.
Liberum has concerns that price increases implemented by boohoo, at a time when consumers are under pressure, will have a direct impact on rising return rates that have been hampering the online fashion space.