The Boohoo share price is struggling even after the company published strong quarterly results. The shares declined by more than 2% on Wednesday and settled at $323, which is more than 30% below its highest level last year.
In a report on Tuesday, Boohoo said that its revenue rose by 32% in the three months to May as the country reopened. This growth was mostly because of a 50% growth of the UK and the US, where revenue rose by 43%. The firm also maintained its forward guidance of a revenue growth of about 25%. It also expects to have an EBITDA margin of between 9.5% and 10%.
The company’s strong results happened as more people went shopping after the UK government eased lockdowns. Indeed, data published by the Office of National Statistics (ONS) showed that the UK consumer price index (CPI) rose by more than 2% in May. It attributed this growth to clothing shopping.
In a call with investors, the company also said that it will consider taking Debenhams back to the high street. For starters, Debenhams was once one of the leading high street brands in the UK.
Burdened by high debt and weak sales as the coronavirus pandemic spread, the company went bankrupt this year. In a deal, Boohoo decided to buy its online business. It relaunched the websites and apps in April and is now talking to some suppliers about taking some business in the high street.
So, what next for the Boohoo share price?
Boohoo share price forecast
The daily chart shows that the BOO share price has struggled lately. This has seen it drop below the 50-day and 25-day exponential moving averages (EMA). At the same time, it has formed a descending triangle pattern that is shown in blue. In price action, this is usually a bearish signal.
Therefore, in my view, I suspect that the share price will keep falling as bears target moves below 300p. However, in the long-term, I expect that the company will do well, helped by its popular brand, combination with Debenhams, and its American business.