Revenues jump 50% as UK and international sales rise.
PrettyLittleThing and Nasty Gal boost Boohoo’s first half
- Shares in Boohoo lifted by 9% as revenues and pre-tax profits rise in first half.
- Celebrity endorsements and faster delivery times helped improve customer awareness and propositions.
- We recommend Boohoo as a ‘buy’ for growth seeking investors.
Boohoo, the online clothes and accessories retailer, this morning released half year results that pleased the market very much, helping lift the shares in excess of 9% in early trading. Group revenues jumped by 50% compared to the same period last year to £395m, which investors should acknowledge was well ahead of previous guidance. Elsewhere, the adjusted EBITDA headed higher by 43% to £39.6m and pre-tax profits rose a more modest 22% to £24.7m.
Strong sales growth came from all regions, with UK sales up by 43% and international growth coming in at an even faster pace of 62%. International sales now account for 41% of group revenues.
Its legacy brand Boohoo did well (up 15%) but was outshone by newly acquired businesses PrettyLittleThing and Nasty Gal who saw revenues up by 132% and 111% respectively. Both of these businesses were key to driving up international growth and all three businesses continued to gain market share. Celebrity endorsements, faster delivery times and options, along with smoother refund processes helped improve the group’s customer propositions. There is no doubt that recent investment into its Burnley and Sheffield distribution centres helped meet the increased demand and further automation of these centres should help in the future.
Having only recent placed Boohoo on our ‘buy’ list, we are pleased to see the reaction in the share price. We are of the view that online retailers will continue to drag sales from the high street for some time to come and this is clearly reflected in the sales performances of companies in the sector. Even though there is heavy capital investment at the moment, the group is still generating good cash flows and growing profits. We’d suggest that the group is a growth idea for investors taking medium risk approach and wanting a longer term approach to the evolving shape of clothes and accessories retailing in the UK and international markets.
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