Boohoo upgrades forecasts after strong end to year

Teen fashion retailer Boohoo said it now expects full-year revenue to be 40 per cent to 42 per cent ahead of last year at slightly higher margins.

The Manchester-based group, which only sells online, had previously been expecting sales growth of 33 per cent to 38 per cent at a margin of around 10 per cent before interest, tax and depreciation. The medium-term guidance of 25 per cent sales growth each year remains unchanged.

“The group has enjoyed record trading in the last four months of 2019,” said chief executive John Lyttle. “All of our brands have performed exceptionally well and delivered strong market share gains.”

In the four months to the end of December, sales increased 44 per cent at constant exchange rates although gross margins were lower.

Even at boohoo, the longest-established of the company’s three main brands, revenue rose 42 per cent in the period. At PrettyLittleThing sales were up 32 per cent while at US-focused Nasty Gal they doubled.

The group did not provide figures for Coast, Karen Millen or MissPap, the three brands it acquired during 2019, though Mr Lyttle said they were “showing great promise and open different target markets for the group”.

Boohoo’s performance contrasts vividly with that of more established fashion retailers, who have generally posted anaemic sales growth in their most recent trading periods.

Caroline Gulliver, analyst at Jefferies, said the performance of boohoo in the UK suggested it has “taken more market share from high street retailers such as New Look, Top Shop and River Island” while the transition from being a single-brand, UK focused retailer into an international player had been “smoothly executed”.

Over two-fifths of the Aim-traded company’s sales now come from outside the UK. 

The company said that Brian Small, the former JD Sports finance director who joined as a non-executive last year, will become deputy chairman. Another non-executive will chair the audit committee once the group’s full-year results have been published.

As deputy chair, Mr Small will “will lead the non-executive directors on matters where independence is required”, the company said. Chairman Mahmud Kamani, who co-founded the group in 2006, is still its biggest shareholder and so not considered independent.