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Boohoo starts to recover

The online fashion retailer's full-year results fell in line with expectations following a profit warning in January
May 6, 2015

Customer numbers at Boohoo (BOO) jumped by nearly a third to 3m as the online-only fashion retailer extended its product range and invested in its website and warehousing. Sales for the year to February rose 27 per cent - and by a third in the UK to £94.3m - but heavy spending stopped most of the growth filtering down to the bottom line. Operating profits before exceptional items finished the fiscal year up just 6 per cent to £11.8m.

IC TIP: Sell at 27p

Menswear sales were notably strong, as were Boohoo's new plus-size and petite lines. International growth is key to management's strategy, but here things were tougher. The company introduced foreign language websites, extended payment options to accommodate multiple currencies and sharpened marketing. But these initiatives failed to stimulate sales growth to the degree that management had hoped, and the strength of sterling against various foreign currencies also eroded the reported result.

The number of items per basket rose, but average order values fell 4 per cent as Boohoo cut its UK prices. Those price cuts also hit the group's gross margin, which slipped 2 percentage points to 60.8 per cent.

Broker Peel Hunt expects pre-tax profit of £15.7m this year, up from £12.4m, with EPS of 1.1p, up from 0.9p.

BOOHOO (BOO)
ORD PRICE:28pMARKET VALUE:£314m
TOUCH:27-28p12-MONTH HIGH:56pLOW: 21p
DIVIDEND YIELD:nilPE RATIO:37
NET ASSET VALUE:6pNET CASH:£54.1m

Year to 28 FebTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2011*24.50.1nana
2012*29.00.2nana
2013*67.33.2nana
2014109.810.70.75nil
2015139.911.10.75nil
% change+27+3--

Ex-div: na

Payment: na

*Pre-IPO figures