|Bid||1,923.50 x 0|
|Ask||1,924.00 x 0|
|Day's range||1,907.00 - 1,973.00|
|52-week range||19.11 - 2,730.00|
|Beta (5Y monthly)||0.75|
|PE ratio (TTM)||21.48|
|Earnings date||03 Nov 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||12 Dec 2019|
|1y target est||2,786.87|
Associated British Foods' (LON:ABF) stock is up by a considerable 13% over the past month. We wonder if and what role...
(Bloomberg Opinion) -- Fast-fashion trailblazer Boohoo Group Plc is being forced to slow down.Retailers including Amazon.com Plc, Next Plc and Asos Plc are dropping Boohoo products after a Sunday Times article alleged unfair working conditions in its U.K. manufacturing chain in Leicester, England. The company came under criticism from social influencers including former reality TV star Vas J Morgan and model Jayde Pierce. Boycottboohoo has been trending on Twitter.After losing 2 billion pounds ($2.5 billion) in market value this week, Boohoo said on Wednesday it’s launching an independent review of its supply chain led by Alison Levitt, a lawyer and former public prosecutor. It also cut ties with two suppliers that infringed on its code of conduct, but said there were inaccuracies in the newspaper report.Even though the investigation will not be completed for some time, the fast-growing company, founded in 2006 to make cheap, catwalk-inspired fashions for young shoppers, is right to take action. Boohoo will bolster its board by appointing two more independent non-executive directors with backgrounds in environmental, social and governance issues. It is essential that it makes quality hires. But it should go further. Co-founder Mahmud Kamani remains executive chairman. If the company is serious about putting itself on a surer footing, it should appoint a strong, independent chairman.One option would be to elevate Brian Small, the former finance director of JD Sports Fashion Plc, who is currently Boohoo’s deputy chairman and senior independent director. Part of Boohoo’s problem is that it has been growing at breakneck speed and hoovering up rival high-street brands. As sales fly, suppliers struggle to keep up, and so they subcontract to other companies, further removed from the retailer. This is what appears to have happened in this case highlighted by the Sunday Times, according to Boohoo’s investigations into the report. Boohoo is now taking steps to crack down on this practice, refusing to place orders with big suppliers unless they disclose subcontractors and allow them to be audited. Boohoo’s new chief executive officer, John Lyttle, has experience tackling this kind of situation. He was formerly chief operating officer at Associated British Foods Plc’s Primark, which has dealt with its own supply chain issues in the past. Even so, there will be costs associated with scrutinizing and overhauling the manufacturing base, and they may ultimately have to be passed onto Boohoo’s customers.The company will invest 10 million pounds to eradicate supply chain malpractice. But it’s not clear what will be found in the independent review. If there are shortcomings, they must be dealt with, at the requisite cost. Boohoo, whose cheap, dressy clothes are often discarded once they’ve appeared in enough selfies, is particularly vulnerable to environmental, and now social, criticism. Sports Direct saw its sales slow after allegations in 2015 about poor conditions in its distribution center in Shirebrook, Derbyshire. Although Boohoo no longer supplies Amazon directly, the U.S. online retailer still holds stock from Boohoo and its associated brands from previous agreements. It will be suspending these products as well as any offered by third-party sellers while Boohoo conducts its investigation.While many young people say they are concerned about the environment and working conditions, it’s not clear how many Boohoo customers will care enough to stop buying its puff-sleeve blouses and very short denim shorts. They may care more about increases in price however, particularly if they have been furloughed because of the coronavirus lockdown or risk losing their jobs altogether in the health crisis’s aftermath.So Boohoo has many challenges ahead. It will have to balance a potentially higher cost base with its low prices, while working to integrate recent acquisitions and manage a growth rate that is still likely to be superior to rivals.That is even more reason why a strong independent chairman must be recruited without delay.(Updates to explain Amazon’s relationship with Boohoo in 11th paragraph.)This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Don’t be fooled by red replacing black as this season’s color at Zara-owner Inditex SA.The Spanish fast-fashion behemoth reported its first loss since it went public in 2001 after shutting stores during Covid-19 lockdowns worldwide. But nimble retailers will still prosper as economies open back up again, and Inditex is among them. In fact, with a big investment plan to bolster online sales, the company could well emerge even stronger than before the pandemic.The world’s largest fashion retailer is also aggressively overhauling its store network to focus on more muscular flagships. It has already been closing smaller outlets, while opening fewer, larger stores for the past few years. This will accelerate over the next two years, with between 1,000 and 1,200 stores closed, many belonging to Inditex brands other than Zara, such as Pull&Bear, Oysho and Stradivarius. The aim is to transfer their profit contributions to bigger shops or online.There are important costs related to that transformation. The first-quarter net loss of 409 million euros ($465 million) included a 308 million-euro charge for closing stores. And Inditex hasn’t been completely insulated by the retail dislocation. Net sales fell 44% in the three months from Feb. 1 to April 30 due to the coronavirus impact.But Inditex’s business model came into its own during the pandemic. Most garments are ordered within the fashion season, and the company, which gets about two-thirds of its revenue from Europe, has kept its supply chain tight. About 60% of products come from manufacturers in Spain, Morocco, Portugal and Turkey.In early March, the company scaled back purchases when it saw how the pandemic was developing. In early May, it sped them up again to make sure it had enough playsuits and flimsy blouses on hand for June and July. The strategy worked. Inditex actually ended the first quarter with 10% less stock, an impressive feat when other retailers have been saddled with a mountain of unsold spring and summer garments.At the same time, its online business thrived thanks to efforts including the introduction of radio-frequency-identification technology that tracks where every maxi dress and balloon-sleeve blouse is. This enables online orders to be fulfilled from wherever the stock is, be that in warehouses or stores. As my Bloomberg News colleagues have noted, when shops were closed, Inditex was able to redeploy stock to its digital business. Online sales rose 95% year-on-year in April.To capitalize on this trend, Inditex will spend 1 billion euros between now and 2022 to bolster its internet sales, and a further 1.7 billion euros upgrading its stores and further integrating them with its digital platform. Shops will become distribution hubs as well as places that customers can browse and buy products in real life. The aim is for more than 25% of sales to come from digital channels by 2022, up from 14% in 2019.Despite its strengths, Inditex has not been immune from the pre-Covid-19 pressure on the apparel retail sector, with women generally buying fewer clothes and cheaper rivals, such as Boohoo Group Plc and Associated British Foods Plc’s Primark chain, nipping at its heels. That means the strategic blueprint for the next few years is not without risk.Zara is not the cheapest clothes retailer, and in tougher economic times the chain could prove too pricey for some cash-strapped consumers. What’s more, it could be a tricky time for Inditex to put its faith in big flagships if people emerging from lockdown shun larger stores, malls or city centers. And rivals are not giving up. Even fusty British retailer Marks & Spencer Group Plc said it aimed to speed up its supply chain, including using factories closer to its U.K. market.But thanks to its strong balance sheet, Inditex should be able to stay ahead. The company had net cash of 5.8 billion euros at the end of the first quarter. While Covid-19 has upended retail, some things should stay the same, including Inditex’s superstar status.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.