Impressive US sales growth and margin improvement helped profits hit £31m
Companies: boohoo group Plc
Fast fashion retailer Boohoo saw pre-tax profits increase 97% last year driven by acquisitions, overseas growth, and margin improvement.
The AIM-listed mid-cap said revenues rose to £295m during the year, a 51% increase, which was ahead of market expectations. PBT jumped 97% to £31m from £15.6m last year, and the Group has a strong net cash position of £58.4m.
Sales in the UK rose 33% while sales in Europe jumped 50%, but the big news from today was the 140% in US sales growth. Nearly 40% of Boohoo revenue is earned outside the UK.
BOO has upgraded guidance four times over the course of the year, and early investors have enjoyed a 260% increase in its share price since last March. Since its flotation three years ago, the company has seen its market cap jump to more than £2bn from £560m.
The Manchester-based firm told the market that investments in its website in the past few years were starting to pay off, and predicted revenue would grow by around 50% this year.
CFO Neil Catto said the company had benefitted from favourable currency since the Brexit-induced drop in sterling as sales in other currencies exceeded its purchases. He added that the firm had improved profit margins and cut prices with the extra cash.
While Co-CEO Carol Kane said, social influencers helped drive performance as well as testing small batches of products.
Analyst Matthew McEachran said:
"Today’s figures are clear evidence of both Boohoo’s successful business model and growth strategy, with PBT/EPS doubling in FY17, c2% better than forecast. The balance sheet remains strong with unchanged net cash of £58m despite the acquisition and increased capex spend. Guidance today signals sales/EBITDA growth in FY18 in line with our current forecasts, with higher Pretty Little Thing growth expected (both sales and EBITDA) offset by more modest Nasty Gal growth. Management has taken a lot on with the opportunistic acquisition of the latter, so we are relieved that guidance is prudent as they manage any execution risk and establish the platform for future growth. A lot of the recent re-rating has been well justified but we wonder if the market was hoping for a sizeable upgrade today."
While Zeus Capital said a year of upgrades had been topped with another sales and earnings beat as it upgraded its FY18 expectations by c.12%.