Boohoo (LON:BOOH) (LON: BOO) share price has gone nowhere this year, continuing an underperformance trend that has been going on for almost four years. The stock has pulled back by more than 21% from its highest point this year even as the FTSE 100 index is nearing its all-time high. Similarly, Asos, a similar company has also continued to languish.
Booho’s underperformance is continuing
Boohoo has been going through major challenges in the past few years. After seeing strong growth during the COVID-19 pandemic, the company faced numerous accusations about its work. It has never recovered since then and is down by over 92% from its highest level in June 2020.
Boohoo’s stock performance has caused significant losses to its investors. In this case, people who invested £100,000 at its peak now have less than £10,000, meaning that those who just bought the FTSE 100 index are doing much better.
Boohoo is suffering from slow revenue growth, high product returns, a bad reputation, and high competition from the likes of Shein and Temu. This month, Shein said that it more than doubled its profit to over $2.2 billion in 2023 as it prepares to go public.
The most recent half-year results showed that Boohoo was still ailing even as the management made some improvements. Its revenue dropped by 17% to £729 million as its adjusted EBITDA fell by 12% to £31 million.
The company has made some progress to streamline its operations. It reduced its inventory to £176 million. At the same time, Boohoo reduced its operation costs as the management focused on profitability. Its total operation costs fell from £428 million to £358 million.
Reducing these costs is a good thing. However, slashing the marketing costs is relatively risky considering that Shein and Temu are spending millions to reach British customers.
There are some positive signs about the company. For example, Fraser’s, the parent company of Sports Direct (LON:FRAS) and Frasers, has bought a substantial stake in Boohoo. It now holds about 21% of the company. I have long believed that Fraser’s could scoop Boohoo if the stock continues to underperform.
Boohoo share price forecast
BOO chart by TradingView
The daily chart reveals that the BOO stock price has remained in a tight range in the past few months. It has constantly remained below the 50-day and 100-day Exponential Moving Averages (EMA).
A closer look shows that the stock has formed a symmetrical triangle pattern that I have shown in black. This triangle pattern is now nearing its confluence level, meaning that a big move may be about to make a big move soon.
Therefore, at this stage, the outlook for the Boohoo share price is neutral since the breakout could happen in either direction. The key support and resistance levels to watch will be at 30p and 37.55p.