Boohoo expects group revenue growth for the financial year to 28 February 2021 to be 36% to 38%, ahead of previous guidance of 28% to 32%

Boohoo expects group revenue growth for the financial year to 28 February 2021 to be 36% to 38%, ahead of previous guidance of 28% to 32%

UK online fast fashion retailer Boohoo Group has raised its revenue guidance for the full year on the back of strong peak trading which lead to a 40% rise in group sales for the four months to the end of December. 

In a trading statement this morning (14 January), Boohoo said total group revenue amounted to GBP660.8m (US$902.06m) in the period, up from GBP473.7m last year, with growth across all brands and geographies.

Domestic sales were also up by 40% to GBP357.2m, while those in the rest of Europe increased 30% to GBP90.4m. Sales in the US and the rest of the world grew by 52% and 20% respectively. 

Gross margin for the four months narrowed 50 basis points on last year to 53%.

Meanwhile, Boohoo cited the successful integration and re-launch of the Oasis and Warehouse brands onto its multi-brand platform and said it has made significant progress on its Agenda for Change programme.

The strategy was launched after months of scrutiny over Boohoo's Leicester garment supply chain, and an independent review by senior barrister Alison Levitt QC that identified "many failings". A list of 17 recommendations were outlined, which led the fashion company to launch its Agenda for Change and appoint retired judge Sir Brian Leveson to provide independent oversight of it.

In line with the group's ongoing commitment to transparency, Sir Leveson's first report has today been published on the group's website. The report acknowledges the pace with which Boohoo is making towards effecting change while noting that recommendations remain work in progress.

"The group believes it is making excellent progress as it works to implement the review's recommendations as part of our Agenda for Change programme," Boohoo said. 

Specifically, the retailer said good progress is being made on its manufacturing facility based in Leicester, which is expected to launch later this year and will also provide a hub for community outreach, while alternative ethical suppliers are being identified as the group reviews its supply chain across the UK and internationally, focused on setting a new industry-wide standard for ethical supply chains.

It has also recently committed to publishing its UK tier one and tier two supplier list by end of March, and global supplier list by the end of September, which will both be updated every six months.

Elsewhere, Boohoo added it is close to finalising an extension of UK warehousing capacity (UK3) with a new site to open in April 2021 that will support the creation of up to 1,000 jobs in the first 12 months of operation. The site is intended to be utilised by the Nasty Gal, Karen Millen, Coast, Oasis, and Warehouse brands, with a transition expected over the course of the first half of the next financial year.

"The addition of UK3 will free up capacity within our existing network as we develop these facilities to support future expansion plans," the group said.

It also outlined plans regarding Brexit, noting while it has implemented operational systems designed to minimise the impact of Brexit on its customer proposition in Europe, it does, however, expect a "small cost headwind", predominantly from higher distribution and administrative costs, which the group will seek to mitigate where possible.

Looking ahead, following the strong peak trading performance, group revenue growth for the financial year to 28 February 2021 is expected to be 36% to 38%, ahead of previous guidance of 28% to 32%.

Boohoo continues to expect to deliver an adjusted EBITDA margin for the year at around 10% despite Covid-19 related headwinds for distribution costs, planned gross margin investment, and accelerated discretionary customer acquisition spend.

Medium-term guidance remains for 25% sales growth per annum and a 10% adjusted EBITDA margin.

"The group is in an excellent position entering 2021, which we expect to be another year of progress towards our goal of leading the fashion e-commerce market globally," said CEO John Lyttle. 

Emily Salter, retail analyst at data and analytics company GlobalData, notes the Boohoo Group has continued to report enviable revenue growth in the face of Covid-19.

"The group has raised its guidance for FY2020/21 revenue growth to 36-38%, far exceeding its previous guidance of 28-32%, as further non-essential store closures in the UK clashed with a key part of the golden quarter including Black Friday, enabling the group to benefit from a renewed shift of sales online through its reputation for promotions, trend-led styles and a leading online offer."

Click here for more analyst reaction to Boohoo's latest figures.