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Young, hip, and maybe too quick: Boohoo reports record revenues, whopping sales but can it sustain its growth?

Last updated: 14:09 25 Apr 2018 BST, First published: 19:09 25 Apr 2018 BST

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Boohoo is one of the UK’s largest online fashion retailers

It’s a rite of a passage as a 20-something-year-old woman: going online and spending your pocket money on some dress of the week.

Quick. Cheap. Almost disposable.

Delivered to your door – stat.

Repeat that enough times and you potentially have the formula of success for Boohoo.com PLC (LON:BOO), the online retailer that today reported surging sales and profits, with a mammoth 97% jump in revenue and sales. 

READ: Boohoo skyrockets upwards: sales nearly double, revenues up 97% year-over-year

It was a growing pains kind of year for the made-for-millennials apparel brand, which integrated a new company, PrettyLittleThing and a new brand, Nasty Gal. The company offers a broad range of clothing, footwear, accessories and beauty products.

And yet, the pain paid off: Boohoo’s growth of late has been thanks to its acquisitions. PrettyLittleThing, clocked a 228% rise in sales to £181.3m and £24.4m came from Nasty Gal, which was acquired in 2017. The Manchester-based retailer's overall pre-tax profit of £43.3m was up 40%.

The company’s co-chief executive officers, Mahmud Kamani and Carol Kane said the year-over-year results had been achieved against the "backdrop of difficult trading in the UK clothing sector".

READ: Clipper Logistics to use new warehouse in Sheffield for boohoo/PLT contract

"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 said.

"Our international business showed higher growth rates and we are pleased with its gathering momentum."

Three distinct brands, three distinct personalities

The trifecta of brands continues to be kept separate with three creative teams and three buying teams, with their own designers and marketing. What is combined is the back end: customer service and warehousing. 

Boohoo manufactures about half of its products in the UK, meaning it can offer turnaround times for new styles in about 4-6 weeks.

And rather than relying on traditional marketing methods, the company looks to social media influencers, bloggers, events and reality TV starts in an effort to win over its desired audience of 16-30-year-olds.

Boohoo acquired PrettyLittleThing in December 2016 for £3.3mln and bought Nasty Gal in 2017 for a drop of what it was previously valued at: US$20 million. 

Don’t call it a comeback: Nasty Gal a shadow of its former self

These days, Nasty Gal, is, at best, a shadow of its former self. The company, founded in Los Angeles, California in 2006 and depicted in the Netflix series and memoir, #Girlboss, started as a tiny, scrappy eBay store, snowballing into a thriving online business that was, at one time, valued at more than US$200mln. The name itself? Nasty Gal was an album by funk musician Betty Davis.

Founder Sophia Amoruso helped make the fashion brand famous for its vintage-inspired, edgy offering.

It was a step up from her teenage life "of dumpster diving and petty thievery," Ms. Amoruso wrote in "Girlboss".

Nasty Gal ultimately (and spectacularly) suffered an incredible public downfall on the back of a lawsuit, following the firing of three employees right before they were set to go on maternity leave. 

Boohoo bought only part of the business

By November 2016, the turmoil grew for Nasty Gal, as it filed for Chapter 11 bankruptcy protection, and Boohoo soon after bought the rights to its intellectual property: namely its brand name, social media accounts, photos and customer database for a shocking rock-bottom price of $20 million.

But things got even more complicated from there. Boohoo did not, however, buy Nasty Gal’s less-than-desirable assets: the giant distribution centre in Kentucky where returns were processed (all 70 employees were laid off). It also did not assume any liabilities, including, precariously, any store credit customers had, leading to harsh online reviews and scathing criticism.

Founder and figurehead Amoruso not-so-quietly moved on to a new venture, Girlboss Media, a media platform.

Boohoo likely saw Nasty Gal as an affordable, quick buy, and said Nasty Gal had "the potential to accelerate the group's international growth, particularly in the U.S."

PrettyLittleThing aims to make girls feel "famous"

From a denim thong aimed at festival-go'ers to a new ready-to-wear 'airport section' (based off the request of an online petition), PrettyLittleThing has come a long way from its roots as an accessories business, which developed into a fashion hub focused around the main idea of making girls feel "famous," according to founder Umar Kamani. His father, Mahmud Kamani is the co-founder and joint CEO of Boohoo. The company operates in the UK, Australia, US and France.

PrettyLittleThing has around 300 employees and counts singers Miley Cyrus, Rita Ora and Nicki Minaj among its fans. Not to mention the fact that at its flagship store opening in LA in 2016, Kylie Jenner attended its launch party. 

No boohoos now: Company continues rapid expansion

Boohoo continued its good news this year, raising sales and profit guidance four times in 2017-18. The company made a profit of 43.3 million pounds (pre-tax) year-over-year ended Feb. 28, up from 30.9 million a year earlier and topping the 39.4 million pounds anticipated by analysts, according to Reuters.

Revenue jumped 97 percent to £579.8, ahead of estimates. 

Shares in Boohoo, which listed in 2014 at 50p, were up 24.8p at 179p at 14:20GMT, valuing the business at £2bln.

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