1Q18 Trading Update

British online-only fashion retailer Boohoo.com reported group sales up 106% at current exchange rates, or 98% at constant currency (CCY), to £120 million in the quarter ended May 31, 2017. Group comparable sales growth came in at 78%. At the group level, UK revenues were up 99%. At CCY, group-level revenues were up 61% in the Rest of Europe, 155% in the US and 80% in the Rest of the World. For the Boohoo brand:

• Revenues were up 48%, or 44% at CCY, to £86.4 million.
• UK sales were up 41%. At CCY, the Rest of Europe was up 33%, the US was up 83% and the Rest of World was up 34%.
• The gross margin was down 20 basis points to 53.9%, due to investments in the customer proposition.

Other brands:

• PrettyLittleThing, which was acquired on January 3, 2017, contributed £30.7 million of revenue in the quarter. The company said comparable sales growth, which is based on the turnover of PrettyLittleThing prior to the acquisition, was 305%. The gross margin was 53.8% versus 57.3% in the prior year.
• Nasty Gal, which was acquired on February 28, 2017, contributed revenue of £2.9 million.

Management announced plans for a new automated distribution “super-site” of over 600,000 square feet, in addition to its second warehouse, which is currently being constructed. The third center will cost around £150 million over three years to FY20. The company today announced an equity placing designed to raise £50 million.

Outlook

The company updated its FY18 guidance to total revenue growth of around 60%, up from previous guidance of 50%. Boohoo brand revenues are now expected to grow by 25%–30%, up from previous guidance of 25%. Management said it expects FY18 group EBITDA margins to be in line with previous guidance of around 10%. Joint CEOs Mahmud Kamani and Carol Kane said, “While it is early in the financial year, boohoo continues to perform well, and PrettyLittleThing delivered exceptionally strong revenue growth in the first quarter as it continues to expand its young female customer base. Nasty Gal has made a promising start since we acquired the brand, with revenues growing strongly month on month, as we increased the product range.” At its FY17 results, the company guided for an EBITDA margin of around 10% over the medium term. This compares to an adjusted FY17 EBITDA margin of 12.1%. The newer brands, PLT and Nasty Gal, will have a depressing effect on EBITDA margins. For FY18, analysts expect the company to grow revenues by 57%, EBITDA by 42% and EBIT by 50%. These estimates were collated before the latest results.