Apr 26, 2017
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Boohoo.com in sales and profits surge, US and Europe are key

Apr 26, 2017

Was it another triumphant year for pureplay e-tailer boohoo.com? You probably know the answer. The fast-growing fashion firm continued to leave many market peers trailing on Wednesday morning as it reported that pre-tax profit was 97% higher in the 12 months to February 28 and revenue rose 51%.


But while the margin falling 320bps to 54.6% was the one blot on Boohoo’s landscape, there was enough good news to suggest that it has a bright future, including a massive surge in US revenues.

And that right future already seems to be happening with joint CEOs Mahmud Kamani and Carol Kane saying that trading in the first few weeks of the 2018 financial year has “made a promising start.” This start comes as the company embarks on its first year as a multi-brand business having acquired Pretty LittleThing and Nasty Gal’s assets in recent months.

This year it is expecting group revenue growth approaching 50% and a group EBITDA margin of around 10%. That divides down as 25% growth from Boohoo, 35% from PrettyLittleThing and the rest to come from its Nasty Gal ops.

2017 SURGE

Just how good was last year? Let’s look at the headline figures. Boohoo brand revenue rose 45%, or 44% at constant exchange rates (CER), reaching £283.37 million. And there was an £11.2 million two-month contribution from PrettyLittleThing, although there are no comparison figures with it being new to the group.

Pre-tax profit rose that aforementioned 97% to £30.94 million and adjusted EBITDA was up 90% to £35.6 million, representing 12.1% of revenue compared to 9.6% of revenue a year earlier.

The company was understandably upbeat, saying that the growing market for online fashion globally gives it “much opportunity for further growth.” And it expects this opportunity to help it overcome tough times for the fashion sector as a whole. “The group's target market of 16 to 30 year olds has a high propensity to spend on fashion and the market is resilient to external macroeconomic factors,” it explained.

Just how resilient that consumer group is was clear from the group’s sales figures. Its two brands were strong in all its markets with UK revenue up 40% to £181.98 million, the rest of Europe surging 53% to £34.73 million (or 47% CER), and the rest of the world up 43% (or 45% CER) to £37.48 million. But it was a 145% take-off in US revenue (124% CER) that really impressed as the company sold £40.43 million worth of goods in this key market.


All that global growth meant that 39% of Boohoo’s revenues now come from outside its original UK market, a sharp rise on the 33% of a year earlier. The rise justified the firm’s heavy investment in those overseas markets, as well as in the UK, as it launched apps in Britain, the US and Australia and responsive websites for European sites, improving its mobile and tablet offering to drive it to 70% of sessions.

It seems to be doing well on key metrics such as order numbers and value, frequency and conversion rate as a result. Last year, for Boohoo alone, its active customers rose 29% to 5.2 million and the number of orders surged 33% to 11.1 million. Order frequency rose 3% to 2.13 and the conversion rate to sale was up 40bps to 4.4%. The average order value rose 12.4% to £37.76 and the number of items per basket jumped 10.3% to 2.89. This latter figure was helped by the greater proportion of international business, which has a higher average order value than the UK does.

While PrettyLittleThing’s numbers were much, much lower, it is seeing impressive growth rates across all those metrics too and is managing to outstrip Boohoo’s growth, although coming from a much smaller starting point, that’s no surprise.

But what about that margin decrease? The company said the fall from 57.8% to 54.6%, was primarily due to a planned increase in promotional activity. And it said that this has in turn increased sales growth.

So we should expect more of the same in the year ahead, an expectation that should be a wake-up call to any retailer not yet making the most of the e-tail opportunities out there.

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