Boohoo Group PLC (LON:BOO) raised its revenue guidance for the year after the online fashion retailer delivered robust sales in the last four months of 2018.
Group revenue in the four months to December 31 totalled £328.2mln, up 43% compared to a year ago at constant exchange rates, with growth across all regions.
In the UK, boohoo’s core market, the group achieved a 33% increase in revenue to £180mln for the period despite a challenging retail market that prompted its rival ASOS plc (LON:ASC) to issue a profit warning last month.
READ: ASOS shares slump on profit warning as it succumbs to challenging retail market
Revenue in the rest of Europe rose 54% at constant exchange rates to £44.4mln. US revenue jumped 80% at constant currency to £70.4mln and the rest of the world gained 32% to £33.4mln.
The group’s gross margin for the four months edged up 170 basis points (bps) to 54.2%.
The boohoo website delivered a 14% constant currency rise in revenue to £163.5mln and the gross margin increased 150 basis points (bps) to 52.5%.
The company’s PrettyLittleThing online retail brand saw revenue surge 96% to £144.2mln at constant currency while the gross margin rose 110bps to 56.4%.
NastyGal, the fashion website boohoo rescued from bankruptcy in 2017, achieved a 76% rise in revenue to £20.6mln at constant exchange rates but the gross margin fell to 54.4% from 55.3% last year.
“Of its brands, Boohoo and Nasty Gal’s revenue was below market expectations but PrettyLittleThing’s sales were considerably ahead of forecasts," said AJ Bell investment director, Russ Mould.
“The result is overall group revenue beating market estimates by about 2%. While nobody is perfect in the world of retailing, you cannot deny that BooHoo seems to have the edge over its rivals."
The firm ended the period with net cash of £189mln, compared to £127mln a year ago.
Boohoo lifts revenue forecast, narrows guidance range for margins
For the year to February 28, the company expects revenue growth of 43% to 45%, above its previous guidance of 38% to 43%.
Boohoo also narrowed its forecast range for adjusted EBITDA margins to between 9.25% and 9.75% from 9.0% and 10.0% previously.
"We are delighted to be reporting yet another great set of financial and operational results and would like to say a very big thank you to all our team and customers,” said joint chief executives Mahmud Kamani and Carol Kane.
They added: “The global growth opportunity is significant and we will be addressing it in a controlled way - investing in our proposition, operations and infrastructure to capitalise on the opportunity."
Despite the upwardly revised revenue estimate, shares in boohoo dropped 7.2% to 180.5p in late morning trading.
READ: Boohoo shares slide as it seeks to reassure investors amid ASOS profit warning
Last month boohoo issued a statement to reassure investors about its trading as its shares fell in a sector-wide decline after ASOS cut its full-year estimates following weaker-than-expected sales in November, a key month for the online retailer.
US expansion not cheap, says analyst
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "Treacherous trading conditions on the high street have seen a number of fashion retailers struggle, and thanks to a profit warning from ASOS, there were concerns a spending slowdown was starting to hurt online vendors too.
"However, boohoo looks to have put that worry to bed with these numbers. That’s because Boohoo’s clothes are unapologetically cheap, so while customers may be reining in their spending, those punters can’t quite say no to fashion that costs less than your average panini."
The analyst said boohoo's US expansion is ramping up and while its sales performance in the nation is "very impressive", an "American adventure isn’t coming cheap".
"Looking further ahead, it’s important stateside spending is kept firmly under control if investors are to believe the group hasn’t bitten off more than it can chew," she said.