Fast fashion retailer Boohoo hit by short-seller attack
Fast fashion retailer Boohoo today denied allegations that it had misled investors following a short-seller attack that saw its share price plunge more than 12 per cent.
In a statement this morning the online retailer said it “strongly refutes the allegations” made in a report published yesterday.
“Boohoo…notes the recent decline in its share price which the group understands is in response to a short-selling note issued on 26 May that contains allegations of disclosing information that could be deemed to be misleading,” the Aim-listed firm said in a statement this morning.
“The Group strongly refutes the allegations made in the research note”.
The retailer’s share price is down around three per cent this afternoon.
Shadowfall published a 53-page report on Tuesday night alleging that the retailer had provided a “misleading impression” of its free cash flow position.
The London hedge fund said Boohoo had overstated its free cash flow by 65 per cent, or £32.2m.
It also said Boohoo classes subsidiary Pretty Little Thing as though it were “100 per cent wholly owned”. Boohoo has denied all the allegations.
The company said free cash flow is disclosed in its most recent results with “clear definitions, alongside a full reconciliation down to net cash flow for the financial year, including items such as tax paid and dividends paid to minority shareholders”.
It added: “International accounting standards require the group to fully consolidate its cash flows, and its treatment of this with respect to its subsidiary, Pretty Little Thing reflects this conformance with accounting standards.”
Boohoo raised £198m through a share placing earlier this month as it seeks to take advantage of the coronavirus crisis to snap up global brands.
Boohoo said it would use the proceeds to “take advantage of numerous opportunities that are likely to emerge in the global fashion industry over the coming months”.