Boohoo booked sales and earnings growth in FY

Boohoo booked sales and earnings growth in FY

Online fashion retailer Boohoo booked both earnings and sales growth in its last fiscal year thanks to strong revenue growth in its domestic market and in the US.

In the 12 months ended 28 February, pre-tax profit reached GBP30.9m (US$39.6m) from GBP15.7m in the prior fiscal year. Gross margin narrowed slightly to 54.6% from 57.8% as a result of investments in the customer proposition.

Group revenue for the year increased 50.8% to GBP294.6m from GBP195.4m. Boohoo brand sales were up 45% to GBP283.4m.

In the UK market, sales grew 33%, and for the rest of Europe were up 50%. In the US, sales jumped 140%, while the rest of the world saw sales growth of 40%. Around 39% of Boohoo sales are now generated outside the UK. Gross margin for the brand was down 330 basis points to 54.5%.

"It has been a momentous year for us, with strong results and the acquisitions of PrettyLittleThing on 3 January 2017 and the Nasty Gal brand on 28 February 2017," said joint CEO's Mahmud Kamani and Carol Kane.

"Both brands have huge potential and the acquisitions represent a step change in the size, structure and operation of the group. We are confident that our expertise combined with the strength and following of our new complementary brands will greatly enhance the group's future growth and profitability."

Boohoo says trading in the first few weeks of the 2018 financial year has made a "promising start" and the company is looking to its development into a multi-branded business. It is forecasting group revenue growth of around 50% over 2017, which includes growth from the acquisitions, and a group EBITDA margin of around 10%.

The company says PrettyLittleThing has showed strong revenue growth in two months' of profitable trading since acquisition.

Kate Ormrod, lead retail analyst at GlobalData, believes that while 2017 has been a notable year for Boohoo with the Nasty Gal acquisition and securing a majority stake in PrettyLittleThing, higher cost prices will pose a threat to margins this year.

"While views its extensive discounting strategy, across both product and delivery charges, as an asset, it does undermine its full price proposition and will be difficult to maintain in the long term."