British fashion brands Boohoo and Burberry are facing significant challenges, reflected in their recent share price movements. On Tuesday, Boohoo's shares plunged 10%, marking a dramatic 90% fall from their 2020 peak. This sharp decline is due to an expected 12%-17% drop in revenue by the end of February, driven by a decrease in active customers. The company has consequently revised its earnings forecast downwards and plans to implement £125 million in annual cost savings.
Analysts Aarin Chiekrie and Richard Hunter have shed light on Boohoo's situation, noting its association with red flags and fading cost headwinds. The company's drastic measures to combat these issues demonstrate the severity of the challenges it faces.
In contrast, Burberry's shares experienced a drop of over 3% following a downgrade from neutral to sell by UBS and a reduction in the price target. The high price point for Burberry's new collection under creative director Daniel Lee has been met with criticism. Analysts Zuzanna Pusz and Andrew Wade suggested that consensus earnings estimates for the brand may be overly optimistic.
Both brands are grappling with difficulties in a challenging market environment. Boohoo's plight is exacerbated by dwindling customer numbers and revenue, while Burberry is dealing with criticism over its pricing strategy and overly ambitious earnings estimates. These hurdles have resulted in significant share price drops for both companies, reflecting investor concerns over their future performance.
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