Boohoo.com has another stellar Christmas, sees 100% growth

By

Sandra Halliday

Published
Jan 11, 2018

Boohoo.com has gone from strength to strength in recent periods as the market for fast, affordable fashion online has powered ahead, even as much of fashion retail has slumbered.

So did the success story continue during the autumn and at Christmas? Of course it did. On Thursday, it said the last four months of 2017 delivered a 100% sales increase (93% currency-neutral) to £228.2 million. 

OK, that was down on the 103% rise for the financial year-to-date (the 10 months to December 31). But while that means AW17 and Christmas were a little slower than the previous season, the slowdown doesn’t appear to be enough to worry about.

The company is growing strongly in all regions and growth is still higher in its domestic UK market and in Europe.
UK revenue was up 107% in the four months, a figure that was actually higher than the 103% of the 10-month period.
Meanwhile the rest of Europe rose 102% compared to a 95% rise for the year as a whole. Even currency-neutral the European growth was impressive with a four-month rise of 76%, only marginally down on 77% for the 10 months.

In the US, the four-month sales rise was 105% (102% currency-neutral), down from 129% (or 122%) for the longer period. The rest of the world was up 59% (46% currency-neutral) compared to 82% (68%) for the 10 months. Clearly, the four-month figures in the two regions were lower than those for the 10 months but were still undeniably strong.

Any bad news? Well, overall, the company said its gross margin dropped to 52.5% from 53.1% while the retail gross margin dropped slightly to 54.2% 54.4%. But this was the result of it investing in sales and had been planned.

BRAND STRENGTH

So where exactly is the growth coming from brand-wise?PrettyLittleThing is the star with revenue up 191% year-on-year to £73.8 million in the four months and an astonishing 232% in the year-to-date.

Boohoo itself saw rises that were rather more tame but still to be envied. In the four months, its revenues soared 25% to £142.6 million. That’s slower than the 34% increase in the 10-month period, but having risen 55% a year earlier, comparisons are getting tougher for Boohoo as the business matures. 

Acquired brand Nasty Gal saw revenue of £11.09 million in the four months and the company said sales have been increasing month-on-month from start-up in March 2017.
Boohoo now expects group revenue for the year to rise 90%, which is up from its earlier guidance of an 80% increase. That 80% figure had already been raised from a 60% prediction only a few months ago.

And the company expects group adjusted EBITDA margins to be between 9.25% and 9.75%, narrowing the range from the 9% to 10% as guided at the time of its interim results.

Clearly, this is still a dynamic business. As each year goes by, comparisons will get tougher and tougher for a company that is maturing fast and that could affect its share price. It dipped late last year and also dropped slightly in early Thursday trading although it soon recovered. 

Some shareholders who have paid a high price for their holdings will fret that a company whose shares trade at an eye-watering multiple of its earnings (almost 80 times at last count) is seeing slower growth overall. But it’s clearly not ‘in decline’ and its ability to keep sales rising in triple-digits is certainly impressive in what is one of the toughest markets for fashion retailers ever.