Boohoo bumped up to 'buy' by Liberum

In a note on online retailers, Liberum highlighted a consistent improvement in sales retention, higher customer lifetime values and said Boohoo has the best lifetime value to customer acquisition costs spread versus peers. Still, the brokerage said it was mindful of early stage and execution risks.

"We view Boohoo as an online fast fashion version of Inditex where through a collection of brands it operates in the highly competitive youth-orientated segment of the fashion market.

"While some may call into question Boohoo’s relatively high customer attrition rates, the company’s high sales retention and resultant LTV:CAC spread signals that the efficiency of its marketing spend is high enough to justify continuing to invest in acquiring customers at a strong rate."

On the downside, though, Liberum said a key risk is Boohoo's relatively early stage growth versus ASOS and Zalando.

"An important support to its ongoing success will be continued investment to develop its warehousing and distribution infrastructure, which will account for the majority of its guided £235m of capex over FY19E-21E. This is intended to lay the platform to support a more than tripling of sales to £3bn (versus £580m in FY18)."

In the same note, Liberum reiterated its 'buy' ratings on ASOS, Zooplus and Majestic Wine, and its 'hold' rating on Zalando.

At 1230 BST, Boohoo shares were up 2.1% to 212p.