Boohoo’s share price continues to rise to new highs as recent supply chain issues continue to be felt.
Boohoo saw air freight and shipping costs soar to £ 26million in the first half of the year. Rival Asos also said there would be “noticeable cost headwinds” to come, including inbound freight costs, inflation in labor costs, outbound delivery charges and Brexit rights. Shore Capital analysts took a grim stance saying supply chain issues are expected to persist through Black Friday and Christmas.
Another headwind for Boohoo has been the rise of Chinese fashion house Schein. Shein is said to be exploiting a series of tax advantages that allow it to be more competitive than UK companies, according to The Mail on Sunday.
The Chinese firm is using its tax breaks to sell products at a discount to its British competitors and has become a thorn in the side of Boohoo and Asos – although it has only had a presence in Europe for seven years.
The Chinese firm’s global sales are expected to approach £ 14.6 billion next year, which could eclipse some of the world’s biggest retailers, including Zara and H&M. In the UK, Shein’s sales are estimated at £ 250million per year and are on the rise.
Boo Price Analysis
Boohoo’s price fell in September, with stocks dropping support near the 260p level. BOO has now found the 200p level to be short term resistance. It is possible that the market will move to find support at previous support levels around 169p or 148.50p. The 200p level would then be the target of a recovery.