Fast fashion company Boohoo delivered soaring full-year sales while pre-tax profit rose more than a third as celebrity influencers and social media marketing raised the appeal of the online retailer’s low-cost ranges.
Boohoo, which sells its own branded clothes as well as the low-cost ranges of PrettyLittleThing and Nasty Gal, reported revenue for the year ended February 28 of £856.9m, up 48 per cent on the previous fiscal year and beating analysts’ consensus of 45.5 per cent growth.
However the UK retailer’s shares fell back in early London trading as markets digested its recent share price run in recent months. Eleanora Dani, analyst at Stifel, said there might “not be much upside from here”, based on the group’s expected future revenue growth and a 40 per cent surge in shares over the past 12 months.
Revenue growth at PrettyLittleThing and Nasty Gal was stronger than expected, more than doubling at PrettyLittleThing and increasing by 96 per cent at Nasty Gal, as the company signed on more celebrities to its social media-based marketing campaigns.
Pre-tax profits of £59.9m, a 38 per cent increase on the previous year, and the company’s gross margins improved by 190 basis points to 54.7 per cent as a result of tighter control over stock and “refinement of the customer proposition”.
The company expects revenue growth for the financial year to be 25-30 per cent with an adjusted earnings before interest, tax, depreciation and amortisation margin of around 10 per cent. It forecasts capital expenditure in the region of £50m to £60m.
The fast fashion group has delivered strong revenue growth in recent years from its low-cost clothes, in contrast to online rival Asos, which issued a profit warning last year and suffered a slide in its share price.
Boohoo said on Wednesday it had increased active customer numbers by 9 per cent to 7m and expanded its social media presence, a crucial marketing tool for the company that uses celebrities, social media influencers and reality TV stars to market its clothes.
The results are the first under chief executive John Lyttle, who joined in March from Primark, where he was chief operating officer. The chief executive has been promised £50m in shares on top of his annual salary and bonuses if he can increase the company’s stock market valuation by 180 per cent in five years.
Mr Lyttle said the group’s investments into its brands and infrastructure had “allowed it to develop a scalable multi-brand platform that is well-positioned to disrupt, gain market share” and capitalise on a “global opportunity”.