Little evidence of external pressure on display as fashion retailer shares rise.
Boohoo stages modest recovery in opening weeks of New Year
- Group revenues head up by 44%, driven by international expansion
- Management ups guidance for full year revenue growth to 45%
- We continue to recommend the shares as medium risk ‘buy’
Despite the profits warning by ASOS in late 2018 which also dragged Boohoo lower, the shares of Boohoo have staged a modest recovery in the opening weeks of 2019. The numbers produced by Boohoo for the final four months of 2018 do not seem to suggest the same growth slowdown as their larger counterpart.
Group revenues for the final four months of 2018 headed higher by 44% mostly driven by their expansion in international markets, but even UK sales were up an encouraging 33%. Just as importantly, the gross margins across all three brands were higher, taking group margins up by 170bps to 54.2%.
The online fashion retailer we have on our buy list has shown little evidence of the pressures on the consumer seen with other retailers. Management have upped their guidance for full year revenue growth of 43% to 45% from their previous guidance of 38% to 43%. As one of the smaller online fast fashion retailers, we have less worries over Boohoo compared to other retailers should the worst scenario unfold from the Brexit process. We continue to recommend the shares as a medium risk ‘hold’ for investors.
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