LONDON (Reuters) - British online fashion retailer Boohoo (BOOH.L) lifted its full-year guidance after reporting robust Christmas sales on Tuesday, outperforming rivals and overcoming weak UK consumer spending.
Boohoo, which sells own-brand clothing, shoes, accessories and beauty products targeted at 16 to 40-year-olds, reported a 44% jump in total group revenue for the four months to Dec. 31 of 473.7 million pounds ($614.6 million).
Revenue growth was ahead of analysts’ expectations, and just topped first half growth of 43%. Boohoo’s AIM-listed shares were up more than 5% at 1100 GMT after hitting record highs of 3.35 pounds earlier in the session.
The retailer is successfully tapping into a generation of younger consumers who shop on their mobile phones and want cheap clothing, delivered quickly.
Founded in Manchester, northern England, in 2006 Boohoo has expanded rapidly, listing its shares in 2014. They have risen 71% over the last year, giving the group a market capitalisation of 3.9 billion pounds - more than the 136 year-old Marks & Spencer's (MKS.L) which is listed on the FTSE 250 .FTMC.
Boohoo bought the PrettyLittleThing and Nasty Gal brands in 2017 and MissPap, Karen Millen and Coast in 2019.
The company has also utilised high-profile celebrity collaborations promoted on social media, such as with model and actress Cara Delevingne and pop group Little Mix.
Boohoo saw strong revenue growth across all its key geographic regions in the September-December period. Sales of the Boohoo brand rose 42%, with PrettyLittleThing up 32% and Nasty Gal up 102%.
“All of our brands have performed exceptionally well and delivered strong market share gains,” Chief Executive John Lyttle said in a statement.
The group is now forecasting full year 2019-20 revenue growth of 40-42%, up from previous guidance of 33-38%, and a core profit margin (adjusted EBITDA margin) of 10.0-10.2%, versus previous guidance of “around 10%”.
While Boohoo is thriving, Britain’s wider retail sector, from department stores to fashion brands, is battling some of the toughest trading conditions seen for a generation.
Industry data published last week showed British shoppers cut back at the end of 2019, rounding off the worst year since the mid-1990s for retail sales amid uncertainty over Brexit, last month’s national election and slowing wage growth.
Prior to Tuesday’s update analysts were on average forecasting for Boohoo’s 2019-20 year core earnings (earnings before interest, tax, depreciation and amortisation - EBITDA) of 116.1 million pounds, according to Refinitiv data, up from 84.5 million pounds in 2018-19.
Analysts at Liberum said the update implied upgrades of about 8%.
“Boohoo’s business model and operational execution is delivering best-in-class growth and earnings momentum,” they said, noting they have already upgraded their EBITDA forecast by 22% over the last year.
Reporting by James Davey, Graphic by Thyagaraju Adinarayan, Editing by Paul Sandle and Susan Fenton