Given execution & capacity risk has diminished, a 30% de-rating means the market is discounting higher growth and profit from the 3 brands, and future warehouse savings. Many headwinds faced by offline UK retailers are also Boohoo opportunities, namely the online shift and a promotional market, where it excels. The brands are at different life cycle stages; so near term mix dilutes EBITDA % but, over time, EBITDA growth should exceed sales growth. The market appears to have adjusted badly to the mix dynamics of having high growth/immature brands, Pretty Little Thing (PLT)/Nasty Gal (NG), and undervalues the group as a result. Buy for growth and outperformance.
