Boohoo snaps up Oasis, Warehouse, says lockdown quarter's sales soared
Boohoo’s trading statement on Wednesday must have been one of the most eagerly anticipated updates recently as everyone is keen to know how the hugely successful online retail giant has been faring in the past three months. So how has it done? Superbly, it seems.
But that was almost a secondary story as buried in its announcement was the news that it has acquired the online businesses of failed Oasis and Warehouse for just £5.25 million in cash from Hilco Capital.
The two chains went under during the lockdown, their turnarounds having been stalled by the forced closure of stores. Boohoo said they’re “a complementary addition to our portfolio of brands”.
The purchase price is very low for what were two hugely popular UK brands, even with their well-publicised problems. And that price is also much less than the £18 million it earlier paid for Karen Millen.
In the months ahead, it will integrate them into its platform, “allowing both brands to benefit from the group's insight, infrastructure, supply chain and operating model”. Between them in the year to February 2020, the two labels generated direct online revenues of almost £47 million.
Moving back to look at Booho’s first-quarter figures, the period up to May 31 saw its total revenue rising by 45% to reach £367.8 million. In the UK, it saw a 30% rise to £183 million, and in the rest of Europe, revenue was up an astonishing 66% to £63.4 million. In the US, it rose 79% to £92 million and in the rest of the world was up 22% to £29.4 million. The variations at constant exchange rates were fairly small.
These were impressive numbers at any time and especially so during a period when consumers may have been forced to turn online to get their fashion fix, but also seem to have been fairly fashion-averse in the early weeks of lockdown.
Its three legacy brands (Boohoo, PLT and Nasty Gal), all carried on with their usual sales surges and its newest brands (MissPap, Karen Millen and Coast), also “continue to trade strongly having successfully integrated onto the group's scalable platform last year”.
The group’s strong showing meant it didn't need to take advantage of the UK government's financial support packages during Q1. Not that the quarter was consistent, with the company saying that trading in the middle of March through to early April was “mixed”, as a result of the impact of the pandemic. Initially, it saw “a marked decrease in year-on-year growth”. But the performance across “all brands and geographies improved throughout April, with a robust performance delivered in May”.
Importantly as well, the company managed to deliver a strong gross margin, up 60 basis points year-on-year to 55.6%. It said its “test and repeat model” allowed its teams “to back winning categories and trends that have emerged through this period”. Areas such as loungewear and athleisure “have performed well as customer buying habits adapted to a stay-at-home lifestyle, with our marketing strategy and content being pivoted to reflect this change and we have seen strong levels of engagement in response”.
For the year to February 28 2021, the company now “expects to deliver another year of strong profitable growth, and ahead of market expectations”. Revenue growth should be around 25%, with an adjusted EBITDA margin of between 9.5% and 10%. This guidance reflects its expectation of “an ongoing period of consumer uncertainty, likely promotional intensity in markets in which we operate, as well as continued near-term carriage inflation for some of our overseas markets”.
It also reflects ongoing investments into its more established brands as well as anticipated investments into the newer additions to its portfolio.
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