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Another Attack On Boohoo - Buy If It Works

Tim Worstall profile picture
Tim Worstall


  • There are allegations that boohoo is using modern slave labour to produce its garments and that this has been reported to US Customs.
  • There are rumours that this might lead to import bans - something most unlikely to happen.
  • If the stock weakens substantially further, then it'll be time to buy again.

The basic background

boohoo (OTC:BHHOF) (OTCPK:BHOOY) (they prefer it without the capital) is an online retailer of fast fashion. Largely in the UK they're expanding into the US and other markets. They're very successful.

I don't intend to talk about the detailed financials at all. This is a special situation based upon the news cycle and claims being made about modern slavery within the supply chain, that's all it's about too. We've ridden - or at least my advice has suggested - riding this news cycle twice before. This is about, maybe, riding it again.


(boohoo share price from London Stock Exchange)

The business model

Fast fashion means being able to make clothing cheap. But also, obviously, being able to make it swiftly. It's that second which is changing the supply chain.

Most low end - in price that is - clothing is made out in the Far East. Used to be largely China and in the past couple of decades the business has boomed in Bangladesh. I've not just been out there I know a couple of the major owners of garment factories. I grasp the business model. One part of which is that the business has long lead times.

It might take 6 months or even more to gain a specific shipment, from ordering to arrival here in Europe (which most of boohoo's business still is). This is partly just transport distances and times but mostly that's just how the business is set up. Designs are made, manufacturing slots booked, several clothing seasons ahead.

This rather leaves out the "fast" part of fast fashion. It was Inditex (owner of Zara and other brands) which really trialled a change to this system. Instead of that long lead-time supply chain they started to mix and match. Order substantial amounts from the Far East, yes. But then, if there was a

This article was written by

Tim Worstall profile picture
Tim Worstall is a wholesaler of rare earth metals and one of the global experts in the metal scandium. He is also a Fellow at the Adam Smith Inst in London and an writer for a number of media outlets, including The Times (London), Telegraph, The Register and even, very occasionally indeed, for the WSJ. This account is linked with that of Mohamad Machine-Chian: https://seekingalpha.com/user/52914142/comments

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

TheLongerView profile picture
Wow. Tim Worstall actually likes a stock? Most of Tim's articles that I have read are usually about busting the bubble of some over-priced stock or industry. So, it is heartening to hear some positive comments about something. Thanks! I will take a look at boohoo, which being a clueless 60+ year old male, I have never heard of. :-)
Skyfall7 profile picture
You are quite right, the kids don’t read the papers. They love them. Some of influencers went quiet for while, but back on Instagram pushing pretty little thing..& nasty girl, and Now they’ve brought Debenhams ( was big U.K. department store ) Wallis & few other high street brands. So quite a deal. Not sure of their presence in US but huge in U.K. although Zara doing very well online now since lockdown . Delivery vans & Post office full of their boxes alongside boohoo ASOS & of course amazon!
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