Boohoo.com plc (LON:BOO) hiked its full year revenue guidance today as the online fashion retailer reported a jump in first quarter sales, boosted by newly acquired PrettyLittleThing.
Shares rose 8.72% to 240.50p in early trading.
The group now expects revenue for the year to February 2018 to rise 60%, compared a previously estimated 50% increase, following strong trading in the three months to 31 May.
Total revenue in the first quarter jumped 106% to £120.1mln from £58.2mln in the same period a year earlier, with growth across all its brands and regions.
Results included a first revenue contribution of £30.8mln from online retailer in which the group bought a controlling stake in January. The number of active customers in the clothing website surged 146% to 1.6 million.
Boohoo also bought the intellectual property and customer data of fashion retailer Nasty Gal in February after the brand declared bankruptcy in November. The brand delivered revenue of £2.9mln in the first quarter.
“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,” said Boohoo’s chief executives Mahmud Kamani and Carol Kane.
Boohoo's own brand revenue grows...
The company’s own brand achieved a 48% increase in revenue to £86.4mln from £58.2mln a year ago as the website’s popularity among young fashionistas grew with the number of active customers up 24% to 5.2 million.
Boohoo’s revenue in the UK rose 41% while it edged up 44% in Europe, 97% in the US and 50% in the rest of the world.
However gross margins fell 230 basis points to 53.9% on the back of investments in expansion, including broadening its product ranges, improving its website and extending its Burnley warehouse. Full year margins are expected to be in line with previous guidance at around 10%, Boohoo said.
Boohoo announces fundraising
Boohoo has announced a £50mln equity placing to fund plans for expansion.
The plans include the construction of a new automated super-site, which will offer more than £2bn of net sales capacity.
The acquisition of land and construction of the site will cost about £150mln over three years to fiscal year 2020.
Capital expenditure related the super-site is estimated at £75mln in 2019 and about £49mln in 2020.
Boohoo is also constructing a second warehouse extension at its Burnley site, which is expected to be completed in early 2018. It will provide capacity for a £1bn net sales operation.
As a result of these developments, Boohoo has raised its full year guidance on capital expenditure year to £63mln this year from a previous estimate of £34mln.
Boohoo second biggest AIM stock after ASOS
Boohoo is now the second biggest stock by market value on London's AIM market after ASOS pcl (LON:ASC) with a market capitalisation of £2.6bn. However, ASOS has as market value of £5.08bn while Boohoo has less than 2% of the UK online fashion market and negligible share in the US and rest of the world.
Still, Liberum believes there is "significant opportunity for multi-year growth".
Liberum raised its rating on the stock to 'buy' from 'hold', saying the brand's broadening of product ranges, strong brand image and competitive prices have driven sales momentum.
"The group is integrating its new brands well, the inclusion of which is creating an exciting 'must-go-to' hub for young, fashion savvy customers," Liberum said.
"The potential of the multi-brand strategy, after today’s announcement of additional investment to support such growth, also makes us more confident. The upgrades today are our fifth since June 2016 with our full year pre-tax profit estimate now 55% greater than when we initiated in February 2016."
Further acquistions for Boohoo?....
Shore Capital said it would “not discount” the possibility of Boohoo buying more fashion brands in the medium term.
Analyst George Mensah also expects “significant increases” in short term and medium term capital expenditure if the equity raise is successful. He noted that the proposed placing will sees members of the Kamani family sell 36.6mln existing ordinary shares, or a 3.25% stake of the company, but chief executive Mahmud Kamani will still have a holding of more than 16%.
“We have no concerns about the possibility of the most senior member of management selling down equity, we believe this to be opportunistic given the other ongoing financing activity and we believe both CEOs to be committed to the long-term future of the business,” Mensah said.
He added: “It is likely we will upgrade our fiscal year 2018 revenue growth forecasts given the new guidance in the market, prior to the announcement we were expecting a 54% uplift in sales.”