Concerns about Boohoo’s environmental, social and governance credentials are proving difficult to shake off. No matter that the online fashion retailer has been striving to repair its reputation since it was reported last year that workers in Leicester were being paid below the minimum wage and were operating in unsafe conditions during the pandemic — it’s clear that Boohoo still has work to do when it comes to restoring its reputation.
Trimming its target price on the stock from 415p to 395p, Barclays argued yesterday that despite “significant progress” by the company, Boohoo’s stock continued to trade “within an ESG discount to this day”. Julien Roch, an analyst at Barclays, said that “one factor to be aware of from a governance perspective is that the co-founder Mahmud Kamani and his family own around 20 per cent of the shares”. Kamani is eligible for bonuses of £100 million if the group’s market capitalisation hits £7.6 billion by June 2023.
Last year’s controversy wiped more than £1 billion off the company’s value and after the shares fell 6¼p, or 4 per cent, to close on 154½p last night it is now worth about £2 billion.
Overall, London’s stock markets finished the day in the red as weak data pointed to stalling economic growth. The FTSE 100 shed 29.48 points, or 0.4 per cent, to 7,291.78, but still ended the week up 2.4 per cent. The more UK-focused FTSE 250 fared worse, losing 220.33 points, or 1 per cent, to 22,927.71, yet over the five days gained 1.2 per cent.
Among the heaviest drags on the session was Harbour Energy falling 27¾p, or 7.3 per cent, to 351¾p after news that output at one of its gas projects would be lower than expected.
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Travel and leisure stocks were hurt after Heathrow airport said that there had been “high cancellations” among business travellers concerned about being trapped overseas for Christmas by further Covid-19 restrictions. Tui fell 9p, or 4 per cent, to 216½p; Wizz Air shed 71p, or 1.6 per cent, to £42.93; and Whitbread, owner of the Premier Inn hotels chain, declined 39p, or 1.3 per cent, to £28.98.
Elsewhere, FirstGroup recouped previous losses after the train operator warned of an uncertain route to recovery. Although First faces several challenges, analysts at JP Morgan believe the simplification of the group allows it to focus its efforts solely on the UK transportation market with a strengthened balance sheet. The shares, which were boosted by the analysts lifting their price target, rose 5¾p, or 5.9 per cent, to 101½p.
Building on its strong performance earlier in the week after lifting its earnings guidance, British American Tobacco gained 68p, or 2.5 per cent, to £27.59.
Shares in Photo-Me International, best known for its photo booths that take passport pictures, rose 6½p, or 11.4 per cent, to 64½p after it said that trading momentum had continued through the last quarter and that most of its key markets had recovered well since the depths of the pandemic.
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Indices rose after consumer prices were largely in line with estimates last month. The S&P 500 hit a new record, up 44.57 points, or 1 per cent, at 4,712.02. The Dow Jones industrial average rose 216.30 points, or 0.6 per cent, to 35,970.99.
