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He boohoo (LSE:BOO) share price is up almost 14% in the last month. So maybe that relentless decline from 2021 is finally over for stocks. If so, investors will be looking for evidence of a turnaround in the underlying business, one that could drive further share price gains in the future.
The first signs are encouraging
The good news is that the company appears to be laying the groundwork for a recovery. Therefore, it may be a good time to tune into the business now that November's price increase has caught our attention.
But what's behind the decent stock price performance in November? Well, I think one of the most important factors could be boohoo announcing the appointment of their new CEO.
During October, Fraser Group made an unsuccessful attempt to have Mike Ashley appointed to the position. Ashley is the majority shareholder in Frasers, owning a large chunk of boohoo shares.
However, on November 1, boohoo announced the appointment of Dan Finley as CEO, effective immediately.
Finley was promoted internally from chief executive of Debenhams, boohoo's “fast growing” digital department stores.
Vice President Alistair McGeorge said Finley is a “earring”leader in a new generation of digital retailers. Before Debenhams, I had a history of “phenomenal” Success in online retail for 10 years with JD Sports.
I think change at the top can be good for most companies. New managers usually bring enthusiasm and determination. So Finley's appointment may be the start of better times for the boohoo business.
A new strategy
Following that news, the company published its semiannual report on November 13. At that, Finley outlined his plan for boohoo. He said that in the three years he was with the company he transformed Debenhams into a “highly profitable market business with little capital.”
“We have had great success with Debenhams” Finley said, and now he is looking to extend that to the entire business.
Then, on November 18, the company announced that it had conditionally received total gross proceeds of around £39.3m from a placing, subscription and retail offering.
Finley said the funds will support the business in its next phase of growth. However, in December the company announced it had paid off £50m of its bank debt.
However, during November, boohoo put in place new management, new finances and a new plan – all good ingredients with the potential to drive change.
However, there is still a big risk for new shareholders. For starters, the business is still stagnant and loss-making after all the widely reported challenges that brought down the share price in the first place.
On top of that, there is the constant threat from competitors like Chinese fast fashion company Shein and others.
But the stock's bearish trend has stopped for now. The events of November and the rise in the stock price are significant. So I think it's a good time to get interested in Boohoo again.
Like other investors, I plan to follow the company's progress and further my research with a view to considering the stock for my portfolio.
