Boohoo stock touches 13-month low

The British online fashion retailer has seen its share price drop substantially, reaching a13-month low. The dip was triggered by RBC Markets doubts over the company’s future growth.

“We do not think Boohoo’s customer proposition is competitive enough to sustain higher levels of growth, not least without significant investment,” RBC said in a note to investors. Furthermore, the private bank has reduced its target price for the online fashion retailer from 160 pence to 125 pence, retaining its “underperform” rating on the stock.

As a result, the fashion retailer’s shares drop 4.6 percent, adding to the 34.35 percent drop in share prices over the last three months. The Canadian bank explained its rating saying that “In light of the highly competitive nature of the industry and Boohoo’s lower ranking in our Internet Framework, we believe Boohoo needs to invest further in establishing defendable competitive moats.”

Looking ahead, RBC Markets anticipates “a margin re-set driven by price investments, rising customer acquisition costs and enhancements to enhance the proposition, particularly around delivery, where Boohoo is less competitive than its peers.”

Boohoo, that trades on the London alternative stock exchange, AIM, has seen its market valuation shed 45 percent, or 1.7 billion dollars, since squeezed margins at the own-brand clothes seller spooked investors in September, informed the ‘Telegraph’.