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05 May 2021
First Take: boohoo Group - “Encouraging” start to the year
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First Take: boohoo Group - “Encouraging” start to the year
boohoo group Plc (BOO:LON) | 33.9 -0.1 (-1.1%) | Mkt Cap: 430.3m
- Published:
05 May 2021 -
Author:
Ben Hunt, CFA | Kate Calvert -
Pages:
4
FY21 adj. EBITDA is a touch ahead of consensus while current trading has been described as “encouraging” to date. While management’s outlook is cautious, implied guidance suggests consensus forecasts are underpinned. We have some questions about the decline in ROE trading over the last reported period.
Trading, 12 months ending 28th February
adj. EBITDA of £173.6m (+37% YoY) versus consensus £171.3m, (consensus range: £166.8m – £179.7m)
Full year sales growth was 41% versus consensus +39% (P3: +40%; H1: +45% ), implying sales growth was 37% for the final two months of FY21 - this compares to sales growth over similar reporting periods of c. 24% at ASOS (during P2) and 54% at Zalando (during Q1).
By geography, full year sales were: UK: +39% (P3: +40%, H1: +37%); ROE: +30% (P3: +30%, H1: +41%, sales growth in ROE appears to have fallen steeply in P4 to just -1%); US: +63% (P3: +52%, H1: +83%); ROW: +16% (P3: +20%, H1: +17%).
Gross margins were +20bps (P3: -50bps; H1:+70bps) and EBITDA margins were broadly flat, with margins helped by lower returns in the period.
Net cash at year-end was £276m.
Outlook & valuation
Trading in the first few weeks of the financial year has been “encouraging”, but the outlook remains uncertain with management stating that the benefit of lower returns is likely to lessen, while freight costs are rising.
Management now expect full year sales growth of c.25% (FY22 consensus: +29%)) and EBITDA margins at 9.5% to 10% - with new brands applying some drag to margins.
Management guidance therefore implies FY22 EBITDA of c. £213m (consensus £211.8m).
Valuation on our pre statement forecasts is c.27x NTM PE, with 27% p.a. 2-year EPS CAGR (FY21-23E).