Boohoo Group PLC (LON:BOO) has less than 5% of UK online fashion sales but is the de facto market leader, analysts said after the e-retailers strong trading report on Wednesday.
The AIM-listed company is "now looking like the pre-eminent leader in womenswear", said analyst Wayne Brown at Liberum said, after what he felt was a "standout performance" in the first quarter to end-May.
Boohoo shares shot up to a new all-time high of 433.5p in early trading on Wednesday after it reported 45% sales growth and snapped up the collapsed Oasis and Warehouse chains for £5.25mln.
Analysts said they understand little or no stock has been acquired as part of the deal and the plan is to relaunch the brands and website in mid-September of this year.
The performance "has no doubt benefited from the group’s main bricks and mortars competitors being closed", Brown said, but it was still a "blowout" set of numbers.
With profit margins improved during the quarter, Greg Lawless at Shore Capital said this highlighted the test-and-repeat model, where the company can quickly step up production and marketing of stronger categories and trends.
This allowed Boohoo to rapidly pick up the trends that were emerging from consumers during the pandemic, with loungewear and athleisure performing strongly as customer buying habits adapted to the stay at home lifestyle.
"The group's marketing strategy has pivoted towards these trends with strong levels of engagement," Lawless said, with spending moving from outdoor to social media and digital.
He added: "In our view, the Boohoo investment case is centred on leveraging the operating platform across its brands to generate operating efficiencies, which can then be reinvested to grow the newer brands in the stable."
Having raised £200mln recently for the stated purpose of adding to this stable, the acquisition of the remaining minority stake in its Pretty Little Thing brand and today's two new purchases, there is still more than £350mln of net cash to pursue further M&A.
However, while the company success has been proved with brands for fashion-forward females aged 16-24 , the purchases of Karen Millen and Coast are focused on an older age category and success is not yet verified.
Sophie Lund-Yates at Hargreaves Lansdown saying it remained to be seen exactly how these 2019 additions were getting on and whether Boohoo could revive Warehouse and Oasis too.
"While we’ve heard trading’s going well with these additions, we haven’t had any numbers to crunch, so it’s hard to say what the big picture looks like," she said.
Acquisitions are an important tool in Boohoo’s armoury, Lund-Yates said, "because the share price valuation demands exponential growth, and there’s only so much fuel left in the tank of the flagship brand.
"What will be interesting is how many further buying opportunities are kicked up by coronavirus."
Overall, she said Boohoo "has a stellar business model and its progress shouldn’t be knocked, but it’s spinning an increasing number of plates these days, and there’s a lot riding on a near-perfect execution of its ambitious plans".
With 4.6% of the UK online fashion market and 0.4% of the EU and US markets, Liberum's Brown said "as M&A across the industry ratchets up over the next few months, we expect boohoo will play its role".