Boohoo powers ahead, UK, Europe and US all super-strong
Boohoo Group released its half-year report on Wednesday and what a report it was. In a fashion retail market that’s seeing a record-breaking level of challenges, the company is going from strength to strength with revenue up 50%.
Let's start with the figures, because they really tell the story without any added explanation. In the six months to August 31, as mentioned, revenue surged and reached £395.3 million. Gross profit was up 56% to £218.6 million and the gross margin rose from 53.3% to 55.3%. Adjusted profit before tax was up 43% at £35.8 million, and statutory pre-tax profits rose 22% to £24.7 million.
Clearly, this is a company that's doing something right, very right. Boohoo said that it saw strong revenue growth across all geographies with the UK up 43% and international revenue up a massive 62%. International revenue now makes up 41% of the group’s total so this holds up plenty of potential for future growth as well.
An future growth should also be helped by the company’s enhanced distribution capabilities with its PrettyLittleThing warehouse relocation completed and automation of its Burnley site being on schedule.
The original Boohoo brand (with the newer BoohooMan added in) showed the slowest growth, but that's not surprising given that it’s the most mature of the labels. Revenue rose 15% to £209 million “with market share gains in all focus markets.” The gross margin at 53.4% was up 110bps and the retail gross margin of 56% was up 160bps. Active customer number also rose 15% to 6.7 million.
International growth continued to be strong, especially Northern Europe, where it’s “rapidly gaining market share.”
New product introductions and comprehensive size range offerings drove growth. BoohooMan performed strongly too and the breadth of the offer across both women's and men's seems to be key to its appeal.
But marketing is also crucial and activity in the half year included high-profile celebrity campaigns with Zendaya, Stefflon Don, French Montana, Dele Alli and Paris Hilton. And it has opened marketing offices in Paris and LA to “provide local knowledge and focal points for future campaigns and marketing initiatives.”
At PrettyLittleThing, revenue of £168.6 million represented a stonking 132% increase. The gross margin at 57.3% was up 250bps and the retail gross margin of 59% was up 200bps. And its active customer numbers almost doubled to 4 million.
That was despite disruption to sales during the warehouse relocation. Growth across all territories was strong and the product range continued to expand with strong growth being seen in the ‘shape’ ranges including Petite, Curve and Plus. And it launched collaborations with UK radio presenter Maya Jama, and American hip-hop stylist Karl Kani.
Nasty Gal managed to come close to PLT as far as growth was concerned with revenue up 111% to £17.7 million. However, the 59% gross margin was down 480bps, driven by refinements to the customer proposition. But that was the only weak spot as active customer numbers rose 313% to 600,000 and it saw strong revenue growth in the US and other international markets.
It all means a strong future for the company and it said that revenue growth for the year to February 28 should be between 38% and 43%, up from previous guidance of 35% to 40%.
The company will soon have a new CEO, as John Lyttle joins from Primark, but current joint CEOs Mahmud Kamani and Carol Kane said of the latest report: “Our group results show yet another strong performance, delivering record sales and profits. We continue to gain market share. We achieved market-leading growth in all markets, with Rest of Europe and the USA being particularly pleasing. Growth in the UK, our largest market, remains very strong.” They also reiterated the company’s aim of achieving £3 billion of net sales globally.
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