Boohoo.com PLC (LON:BOO), the self-titled ‘young, inclusive brand’ online retailer created a bit of a buzz today, reporting it had almost doubled sales year-over-year, ended February 28, 2018, up a whopping 97% to £579.8mln from £294.6mln in 2017.
The retailer said in a statement that revenues in the UK had nearly doubled, up 95%, with international revenues up 99%.
Profits, before tax, were up by 40%, from £30.9m to £43.3m.
PrettyLittleThing and Nasty Gal looking pretty for Boohoo
Boohoo has seen strong growth across all markets, and now has 6.4mln customers, up 22%, with PrettyLittleThing now serving 3mln customers. PrettyLittleThing reported revenues of £181.3m – more than double the previous 12-month period.
Nasty Gal, the former US fast fashion retailer acquired by Boohoo last year, posted sales of £24.4mln. They have 0.6mln active customers.
Joint chief executives Mahmud Kamani and Carol Kane said the strong results were achieved against a "backdrop of difficult trading in the UK clothing sector".
"Revenue from boohoo continued to grow strongly, whilst there has been an exceptional performance from PrettyLittleThing, and Nasty Gal exceeded our estimates in its first year," they added.
"Our international business showed higher growth rates and we are pleased with its gathering momentum."
READ: RBC slashes target price for Boohoo.com citing unsustainable growth levels
However, concerns remain as to whether Boohoo is able to sustain such aggressive growth, with Royal Bank of Canada (RBC) recently stating that it does not think current growth levels are sustainable.
In a recent note to clients, the Canadian bank said: “We do not think Boohoo's customer proposition is competitive enough to sustain higher levels of growth, not least without significant investment.”
According to AJ Bell investment director, Russ Mould, investors need to decide whether they are interested in growth or profitability.
“Warren Buffett mentor Benjamin Graham once argued: ‘In the short-term, the stock market is a voting machine but in the long run it is a weighing machine," said Mould.
“Meaning that fashionable investments may hold sway for a period but eventually earnings and cash flow must be delivered to sustain the valuation attributed to a stock.”
Infrastructure investments
That said, the company has set aside a chunk of cash to put towards infrastructure investments - £62mln this year and up to £106mln throughout 2019.
Boohoo raised £50mln last year to help fund a new warehouse in an attempt to keep up with soaring demand. The site could provide Boohoo with more than £2bln of sales capacity.
“Our strategy will remain focused on providing the best fashion at great prices coupled with excellent customer service," reported Kamani and Kane.
“To this end we have a plan of continuous investment in systems and technology to ensure we offer an optimal online shopping experience. International expansion will continue as we add more country-specific websites, refine our brands’ customer proposition and raise brand awareness through marketing and social media."