- Publication of international factory list: Today’s publication of Boohoo Group plc (LON:BOO) international factory list meets its pledge for full supply chain transparency within 12 months of the Independent Review into its supply chain, published by Alison Levitt QC in September 2020. The list details c.1,100 factories following an extensive mapping and audition exercise that was begun in 2020. The Group has also announced its intention to sign the International Accord for Health and Safety. This is a legally binding agreement that governs working conditions for garment workers in Bangladesh.
- Agenda for change substantially executed: A total of 17 recommendations were made in Alison Levitt QC’s Independent Review which were broken down into 34 deliverables. To date the Group has completed 28 of these targets, with those remaining expected to be delivered in the coming months. Execution on these objectives is overseen by a KPMG review cycle.
- Agenda for change now “business as usual”: In addition to the factory list, the Group has today published the fourth of Sir Brian Leveson PC’s reports to the Board providing independent oversight on the implementation of the Agenda for Change. “applaud the enthusiasm that all at boohoo have demonstrated for the Agenda for Change Programme and chart the very real progress that has been made in relation both to the recommendations set out in the Review and also the wider ethical programme upon which the Group has embarked. It marks the movement of A4C into business as usual which is not, of course, the beginning of the end of the process but merely the end of the beginning”. We concur that the spirit and pace with which the Group has moved to enact all remedial recommendations is testament to its commitment to not only address any shortfalls in its supply chain, but to establish the benchmark for the industry’s supply chain standards. In addition to this Boohoo has made material progress in its sustainability agenda with an estimated 20% of its product ranges to be sourced from sustainable or recyclable materials by this autumn, with this to double to 40% by next summer.
- Valuation: An FY22E PE of 22.0x falling to 17.0x in FY23E is close to 5-year ratings low and is at odds with Boohoo Group’s ongoing track record of profitable and cash generative growth. Our conviction is supported by our intrinsic DCF modelling that derives a share price of 418p, some 48% ahead of current levels. Results for the six months ended 31 August 2021 will be announced on 30 September 2021.
