Boohoo is a data company, that’s what makes it interesting

They say data is the new oil, if that is right and you want to invest in the new oil, then Boohoo seems to be drilling new oil like crazy

Article updated: 6 December 2019 11:00am Author: Michael Baxter

One number sticks out: 0.4 per cent. One piece of irony jumps to mind: Aramco. One acronym gives a hint to the future: VR (virtual reality). And one word ticks away in my subconscious: Timing. Together, they make four reasons why Boohoo looks interesting.

The number

0.4 per cent, it doesn’t mean much without any words attached to it. How about if I say ‘equals market share of online apparel market in the US and EU (excluding UK.)’ All of a sudden that number seems more interesting. Let me add to that a relative value: 4.6 per cent is the market share of the UK apparel market. Boohoo might be enjoying heady growth (profit before tax up 24.7 per cent in the most recent six month period), but its market share is small enough to make me think it can carry on growing.

The irony

Aramco is coming to the stock market, as I write these words, the financial news sphere is buzzing with news of the impending IPO. Yet if you listen to the words coming out of Saudi Arabia, they are enunciating the phrase ‘data is the new oil.’ Actually, the phrase has become a bit hackneyed. Those who work in the data business are bored with hearing it. Privacy experts seem to think data is the new weapon of mass destruction. But whatever your thoughts, there is no doubt that there is money in ‘them data hills’ and while Aramco tries to cash in on the 20th Century’s answer to oil, with a product called oil, Boohoo is emerging as a master of the 21st Century’s oil — data. All it brands — Karen Millen, Nasty Gal, BoohooMAN, PrettyLittleThings, Coast, MissPap and Boohoo itself, collectively create this gushing flow of data. Customers probably don’t mind, not if they get special offers on products that are just right for them. It’s enough to make me wish I was 22 again — come to think of it, I would quite like to be 22 again, anyway.

The acronym

VR is the reason why the online fashion market will grow. The big problem with online is that you can’t try clothes on. But we will very soon have avatars of ourselves, closely matching our body shape, simulating our typical posture, complete with our face in all its splendour. Our avatar will try clothes on, and the online market will expand. When this technology is perfected, Boohoo will be perfectly placed to benefit.

Timing

The Boohoo share price has fallen sharply on news that the company’s two co-founders have sold a high proportion of their shares. The selling has been overdone and it is overdone because:

Firstly, co-founders Carol Kane and Mahmud Kamani are human. Yes, I know the markets may be shocked to learn that entrepreneurs are human, but since the two individuals concerned made £143m from the sale, I don’t blame them one teeny weeny bit. There is no hidden agenda, they sold out for the same reason you or I would have sold out — £143m is a lot of money. Would you care, honestly, if you could’ve got more money if you’d held? How many yachts do you want?

Secondly, well that takes me back to data. Boohoo is at a scale now, and exploits an asset — data — that means it is no longer reliant on the noose of its founders. Even if this share sale does suggest that the founders have lost interest in the business, something I doubt, the company can now carry on regardless, exploring the commodity it has got so much of, namely: data.


These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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