Boohoo raises FY guidance on strong Q1 sales growth
Online fashion retailer Boohoo has raised its full-year revenue guidance on the back of strong growth in its first-quarter.
In the three months to the end of May, revenues more than doubled to reach GBP120.1m (US$155.7m) from GBP58.2m a year earlier. Like-for-like sales, meanwhile, jumped 78%, but gross margin narrowed to 54.2% from 56%.
Revenues benefited from a combination of broadening product ranges, strong brand image, competitive prices and good customer service, while Boohoo says the inclusion of new brands is proving the potential of its multi-brand strategy in delivering strong sales growth.
Boohoo brand revenues jumped GBP86.4m, with the US recording the highest growth at 97%. Domestic sales growth was at 41%, while sales in Europe grew 44%.
Sales for recently-acquired Nasty Gal reached GBP2.9m, while gross margin amounted to 69.9%. PrettyLittleThing sales jumped to GBP30.7m from GBP7.6m on a like-for-like basis. Gross margin narrowed to 53.8% from 57.3%.
Boohoo, which has recently raised GBP50m via an accelerated share book build process, said its results were encouraging across all brands and geographic regions.
"While it is early in the financial year, Boohoo continues to perform well and PrettyLittleThing delivered exceptionally strong revenue growth in the first quarter as it continues to expand its young female customer base," said joint chief executives Mahmud Kamani and Carol Kane. "Nasty Gal has made a promising start since we acquired the brand, with revenues growing strongly month-on-month, as we increased the product range."
Thanks to the quarter's strong trading momentum, the company is now expecting group revenue growth for the full year to February 2018 to be around 60%, ahead of previous guidance of revenue growth approaching 50%. Group EBITDA margins are forecast to be in line with previous guidance at around 10%.
Charlotte Pearce, retail analyst at GlobalData, notes: "The brand consistently relies on discounting to drive sales and while the retailer is known for its low prices, which resonate well with its 16-24 customer base, the frequency of offers undermines its full price proposition. The retailer must reduce the level of promotions as this is not a sustainable strategy, particularly as boohoo.com has held its stance against raising prices due to its value appeal."