City broker upgrades Boohoo shares to ‘Hold’
City broker Shore Capital has upgraded fast-fashion retailer Boohoo, now trading as Debenhams, from a ‘Sell’ to a ‘Hold’ in light of its falling share price.
Boohoo’s share price has dropped by more than a third since last November, after a series of poor trading updates and a public spat with Mike Ashley.
Shore Capital said the group was now trading “broadly in line with UK clothing peer averages” and that it has “re-assess[ed] the risk/reward equation.”
“While we believe that the group could face challenges from a tough macro backdrop, the focus on the Debenhams model could yet provide a more sustainable solution, for which further details are expected during the full-year results,” Shore Capitalist analyst Katie Cousins said.
Boohoo said it believed Debenhams, which the group bought in 2021 for £51m, has a “clear runway” to multi-billion-pound sales and an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 20 per cent.
The Manchester-based company has been struggling with low sales for its youth brands – Boohoo, PLT, and MAN – posting a 16 per cent year on year decline in revenue for 2025.
Shore Capital said it had revised down its numbers to take account of March’s low trading figures, low consumer confidence and the impact of US tariffs.
However, Cousins said she was optimistic on growth prospects for Debenhams.
“[Debehams] has experienced significant growth lately, and whilst it only represents 17 per cent of the group revenue, it is in contrast to the declines seen within Karen Millen and Youth Brands.
“We believe this is a sensible move, and by focusing more on a marketplace model, it provides an opportunity for better profitability,” Cousins said.
Broker Panmure Liberum currently has a ‘Buy’ rating for Boohoo based on “the value inherent in Debenhams”, while Peel Hunt has a ‘Hold’ rating.