Boohoo share price went parabolic on Thursday, its best trading day in years. The 57% surge after the company published encouraging financial results and after a rare bullish pattern concluded. It rose to a high of 18.30p, its highest point since July this year.
Boohoo share price soars as turnaround continues
Boohoo Group stock price soared as the company continued executing its turnaround strategy. In a report released on Thursday, the company announced that it continued growing in its first half of the year.
The results revealed that its loss narrowed substantially in this period even as the revenue and GMV slipped. Boohoo Group’s statutory loss after tax moved to £3.4 million from the previous £126.7 million.
Boohoo Group’s GMV dropped by 19% to £630 million, with most of this coming from the Debenhams brand, which it acquired from bankruptcy five years ago. Its youth brands and Karen Millen GMV slowed to £258 million and £54 million, respectively.
Consequently, the company’s revenue dropped in this period came in at £296 million, down by 23% from the same period last year. This revenue decline was better than expected.
READ MORE: What’s going on with the stalling Boohoo share price?
Most importantly, the company noted that all its brands were now profitable on an adjusted EBITDA basis. The management is now working to ensure sustainable profitability over time.
Additionally, the company continued to reduce its costs and its inventories. Total costs dropped by £160 million from £292 million, and the management sees the figure moving to £100 million. It did this by cutting jobs and implementing other strategies.
It also brought its inventory by 35% to £67.9 million. Falling inventory is always a good thing for retailers as it means that customers are buying and that its pricing power is improving. A retailer with elevated inventories is often a sign that they will reduce prices over time.
Boohoo Group is also improving its balance sheet, with its net debt moving to £111 million from £145 million in the same period last year.
Good progress, but long way to go
Boohoo Group has made a lot of progress in the past few months. However, as the management noted, this will be a long process as the company faces some major headwinds. The CEO said:
“This is a multi-year journey, and we have a clear plan and the right model in place. We are transforming into a lean, tech-enabled, best in class online platform business. The momentum we have built in the first half sets us up well for the remainder of FY26.”
The company’s main benefit is that it runs some of the best-known brands in the UK. Debenhams, which it acquired from bankruptcy, is already its best-performer, a sign that it paid a bargain price for it.
However, some potential risks remain, including the rising competition in the fast-fashion industry and the situation in the UK economy, where Chancellor Rachel Reeves boosted taxes.
DEBS stock price technical analysis
Boohoo share price chart | Source: TradingView
The daily timeline chart shows that the Debenhams stock price has been in a bear market this year. It formed a falling wedge pattern whose two lines are nearing their confluence.
The stock also formed a double-bottom pattern at 11.30p. Like the wedge, this pattern also often leads to more upside. It has moved above the 50-day and 100-day Exponential Moving Averages.
Therefore, after coming under pressure for years, there is a likelihood that it will continue rising as bulls target the key resistance at 24.55. This target is its highest point on June 3 and is about 35% above the current level. A move below the support at 15p will invalidate the bullish outlook.
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