They must be back! But the price of Boohoo actions continues its downward trend

In a short time, investors will not refer to the Boohoo (LSE: BOO) Shares price. Instead, they will talk about how the price of the A musthams shares has worked. That is because the fast fashion retailer will soon be changed.

Upon hearing the news, I must admit that I thought the decision was a bit strange. The last time I visited a musthams store (more than five years ago) did not sell the type of clothing I now see on the Boohoo website. And they were definitely not so cheap.

But by reflecting more, I realize what is happening. The group wants to get away from its fast fashion roots, with ultra thin margins, and restore as a more 'highway business'.

Will this new strategy work?

The company says that the economy has been tested and that the change of the PUBHAMS brand is a plan for the rest of the group. He bought the name and the website for £ 55 million in early 2021, after the British icon, which opened its first store in 1778, collapsed in the administration.

Affirm that their division musthams is “rapid growth and highly profitable“, The last commercial update of the group says that it generated an EBITDA margin (profits before interest, taxes, depreciation and amortization) of about 12% (approximately £ 25 million) for the year ended on February 28, 2025 (FY25).

However, the group has many 'i', 'd' and 'a', which means that it is still a loss of losses at a level after taxes.

As Warren Buffett wrote in his last letter to the shareholders of Berkshire Hathaway: “Ebitda, a defective favorite of Wall Street, is not for us“Previously, he said:”Does management believe that tooth fairy paid for capital expenses?“

When Boohoo's numbers are finished, a adjusted Ebitda expects for the 2015 fiscal year of £ 40 million.

In the fiscal year24, there were £ 58.6m. But after depreciation (£ 48 million), amortization (£ 28.6 million), financial costs (£ 13 million) and the tax (£ 3.3 million) deduced, its adjusted loss after taxes was £ 34.3 million.

I think the Boohoo group (or musthams) remains far from being profitable.

A mixed reaction

And that probably explains the negative response of investors to yesterday's news (March 11). Since March 2020, the shareholders suffered have seen the value of their positions fall by almost 90%.

I am sure that the company has conducted the market research and the crunch of appropriate numbers to completely understand the implications of changing its name and identity. Therefore, I must assume that he has made the right decision to be re -marked.

However, it still faces some important challenges.

With suppliers in 10 different countries, including dozens of them in China, the company is vulnerable to the 'Trump tariffs'. In fiscal year24, sales to the United States represented 20% of the group's income.

And I wonder if the war war war with Phrasers Group (an important shareholder) could be a distraction. The owner of Sports Direct wants Mike Ashley to be installed as executive director of Boohoo. A website is even configured (Booofeservesbetter.com) to present your case. Until now, he remained silent with the brand change.

Boohoo states that it will be “thinner, faster and technologically advanced“. And he says it is”sharply focused on maximizing value for all shareholders“We will see. Personally, until you see a clear route towards profitability, I don't want to invest.