Boohoo share price slumps to new low as AGM looms this week
Manchester-based fast fashion retailer Boohoo has seen its value plummet to a new low ahead of its Annual General Meeting on Thursday of this week (22 June 2023) as shares hit a historic low of 32p during trading on Friday (16 June 2023).
While some of the movement can be attributed to short selling, the market has been starved of good news from the online retail sector generally, but Boohoo’s recent market announcements including a slump to a loss, have been interpreted as a means to get the bad news out of the way.
Market watchers will be tuning in to the AGM and the board may face tough questions about the hefty bonuses paid out out senior executives despite missing several key targets.
The annual report revealed that founders Carol Kane and Mahmud Kamani had been awarded pay increases.
John Lyttle
Kamani’s pay totalled £1.03m, up from £525,000 a year before, Kane earned £987,000, a rise from £496,000. John Lyttle, chief executive earned £1.35m, a slight fall from the £1.38m a year before, including an annual bonus equal to his salary of £851,000.
A bonus scheme for key executives was opposed by almost 38% of shareholders at a special meeting in March but the dominance of the Kamani family amongst the shareholders meant any opposition was doomed to fail.
Panmure Gordon analysts Tony Shiret and Georgia Pettman revealed in May 2023, shortly after Boohoo announced losses, that they had upgraded their advice on boohoo’s stock from ‘Hold’ to ‘Buy’.
However, James Crux, analyst with AJ Bell issued a note to avoid Boohoo stock, more recently, and said: “While Boohoo shares are cheap relative to history and management sees a path back to growth and profitability, only brave souls should invest ahead of June’s first quarter update.
“Structural margin pressures and heightened competition in a notoriously fickle fashion sector suggest the shares could be a value trap.”
Abdullah Sarwar, market analyst and a fintech investor said: “According to the most recent Boohoo news, around 51% of online fashion retailer is currently held by the top 6 shareholders. The insider ownership of the stock is also very high and stands at 23%. Due to the tanking stock price, these whales may be forced to take extreme actions in the coming weeks.
“If a few of these institutional investors decide to sell, Boohoo share price may tank even more. In my previous forecast, I predicted the stock to retest the 30p-35p level. This target was met this week as the price plummeted to 33p.”
THG is also facing shareholder disquiet ahead of its AGM on Wednesday. The Mail on Sunday reported that institutional shareholders ISS and Glass Lewis have indicated they will vote against the reappointment of non-executive director, Iain McDonald.
