PrettyLittleThing is star as Boohoo trading update wows

By

Sandra Halliday

Published
Jun 12, 2018

If further proof were needed that e-tail is the way forward for mass-market fashion, Boohoo.com's Q1 trading update on Tuesday provided it. In the three months to May 31, its total group revenue surged by 53% (or 52% currency-neutral).

That’s the kind of figure that many of its retail peers with a vast physical stores portfolio can only dream about. 

Revenue reached £183.6 million, up from £120.1 million a year ago, with every region outperforming. The UK, its biggest market by far, was up 49%, while the rest of Europe was up 82% (71% currency-neutral), the US 75% (78% currency-neutral), and the rest of the world (ROW) was up 24% (22% currency-neutral).

The company said that it saw market share gains across all geographies and the group gross margin was 55.2%, up 100bps. It also has a strong balance sheet with net cash of £151 million, more than double the figure of a year ago and a great position to be in when you’re investing for growth.

The Boohoo operation itself was the slowest on the growth front, although it can hardly be said to be struggling. Revenue of £97.2 million was up 12% (10% currency-neutral), although the gross margin was 52%, down from the previous full year’s 53.9%. And the retail gross margin of 54.6% was down 170bps year-on-year, although it “improved progressively throughout the quarter, with an exit rate up year-on-year.”

But PrettyLittleThing continued to turn in power growth with a revenue rise of 158% (160% currency-neutral) to £79.2 million. The gross margin of 58.7% was up 490bps year-on-year.

And Nasty Gal also proved its worth, even though it’s a much smaller business. Its revenue rose 149% (163% currency-neutral) to reach £7.2 million. The gross margin of 58.9% was down from the last full year’s 69.9%, but was “in line with FY18's exit rate and expectations.”

The company said that trading in FY19’s first quarter has been in line with expectations and for the full year, it continues to expect group revenue to rise between 35% and 40% with the adjusted EBITDA margin between 9% and 10%. All other guidance for the current financial year and its medium-term guidance to deliver annual sales growth of at least 25% and 10% EBITDA margin are unchanged.

Joint CEOs Mahmud Kamani and Carol Kane said they were "very pleased,” which seems like an understatement in the circumstances. They added that the “multi-brand strategy is delivering above-market rates of growth globally. Significant market share gains have been achieved in all of our key focus markets. The scale of group revenue is aligning with our ambition to become one of the dominant global online retailers and our focus on profitability continues to deliver industry-leading margins.”

They also said that the firm’s “infrastructure continues to see record levels of investment as we invest ahead of our growth curve and develop a distribution network capable of supporting £3 billion of net sales globally.”

Boohoo’s distribution centre extension and automation project at Burnley remain on track to complete towards the end of the financial year, with PrettyLittleThing's move to its own warehouse expected to complete early in the second half.