Boohoo shines in first half as consumer behaviour boosts e-tail
The news has been coming thick and fast around Boohoo Group in recent months, but on Wednesday it was a more regular announcement as the company released its half-year results for the six months up to August 31.
And they showed that it remains in ultra-good health, despite the pandemic and all the events that have surrounded it of late.
In some ways it was still an unusual report – especially compared to its retail peers – as the company was able to tell us about a 45% increase in revenue for the half-year period, to £816.5 million.
Its gross profit rose 47% to £449.2 million and it even managed a margin increase to 55% from 54.3%. Adjusted EBITDA rose 48% to £89.8 million and profit before tax was up 51% at £68.1 million.
There's no denying that coming after an unprecedented period of weakness for the wider fashion retail sector, it was a powerful set of figures.
The company said that it saw strong revenue growth across all geographies and brands with the UK rising 37%, international up 55%, and the US up 83%. It means that non-UK sales now represent 47% of the group total, up from 44% a year ago.
The figures came as the company said it enjoyed healthy new customer acquisition during the period (+34%) and especially in Q1, driven by the pandemic’s impact on consumer behaviour.
The business has a robust balance sheet with net cash of £344.9 million after an almost-£200 million share placement, and a healthy operating cash flow of £147.2 million. This allowed it to come through the pandemic without having to participate in any UK government financial support schemes.
NEW BRANDS PERFORM WELL
Looking more closely at individual brands, the company said that the three brands it acquired in the previous financial year, Miss Pap, Karen Millen and Coast, “are growing well, with solid foundations being built to enable bright futures”. Meanwhile, a by-product of the pandemic was its acquisition of Oasis and Warehouse, the two brands having failed early on in the lockdown due to their stores being closed. They started to trade on new websites from late July and Boohoo is “excited about the potential of these new brands as they complement our successful and comprehensive, multi-brand platform”.
It didn't break out the performance of its existing trio of brands, Boohoo, PrettyLittleThing and Nasty Gal, but based on the figures above, we have to assume that they continued to outperform.
So what does it expect to happen now that things are trying to get back to normal? The e-tailer said that group revenue growth for the year to the end of next February is expected to be 28%-32%, which is up from earlier guidance of 25%. It has made a good start to the second half of the year "with momentum continuing into September". However, it's continuing to plan "for a period of economic uncertainty, including possible reduce consumer spending”.
It’s also expecting to have to spend more on marketing in the second half and overall capital expenditure is expected to be higher than previously anticipated by as much as £80 million-£100 million, reflecting extra investment in automation and overall growth.
CEO John Lyttle CEO, said: "Our business, along with many others, has faced some of its most challenging times in recent months. There are many challenges still ahead due to uncertainties posed by the pandemic, but despite these challenges, there are many positives from our activities in the first half. The resilience of our business model has enabled us to continue to operate our business successfully”.
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