Central bank of Norway acquires stake in fast fashion firm Boohoo
The central bank of Norway has acquired a 3.1 per cent stake in fast fashion retailer Boohoo, according to documents filed on the London Stock Exchange.
Norges Bank is now the fifth largest institutional investor in the online retailer, following confirmation of the investment this week.
Boohoo co-founder Mahmud Kamani is still the largest single shareholder, followed by T. Rowe Price International.
In financial results published in September, the retailer reported profits were down on the pandemic highs of the previous year thanks to hiked operational costs.
Its revenue surged 20 per cent in the six months ending 31 August, with sales leaping to £975.9m from £816.5m in the same period.
Profit before tax was down 5 per cent to £85.1m, down on what Boohoo dubbed “exceptional levels” of profitability in the same period last year, when Ebitda stood at £89.8m.
The company has faced an uphill battle as it seeks to recover its reputation after poor treatment of garment workers.
Robust sales have suggested the fashion firm’s customers are less bothered by the company’s social impact than its shareholders and still enticed by low prices.
But it’s not the same story for Boohoo’s shareholders, for whom this sort of reputational damage doesn’t disappear overnight, analysts have stressed.
“Even if consumers don’t care much about Dickensian working conditions, investors do appear to,” said Freetrade analyst David Kimberley told CityA.M. in September.
“The company’s share price still hasn’t recovered to the highs it was trading at prior to those reports emerging about its poor working conditions — and that’s despite the firm producing several positive results in the intervening period.”
During the height of the pandemic, the firm faced media reports that its factory workers in Leicester were being underpaid and not protected against Covid-19.
Boohoo appointed Alison Levitt QC to look into the supply chain allegations, who found they were “substantially true,” despite an initial denial from the firm.
Boohoo has forecast full year sales growth of between 20 per cent to 25 per cent, implying sales growth of 20 per cent to 30 per cent in the second half of the financial year.