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Boohoo corners lockdown fashion market

Fast fashion continues high street buyouts with Oasis and Warehouse but its own comfy lines keep sales booming
June 17, 2020

People getting all dressed up with nowhere to go have sent Boohoo (BOO) sales soaring through March, April and May. The fast fashion retailer saw a year-on-year UK sales spike of 30 per cent in the three months to 31 May, to £183m.

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Its US division’s sales jumped a massive 79 per cent to £92m in the same period. Overall sales were up 45 per cent. 

The company has also continued its acquisition spree, buying struggling retailers Oasis and Warehouse for £5.25m. These companies made most of their sales through physical stores in 2019, according to Jefferies, so they offer Boohoo more exposure to the UK’s uncertain high streets. 

Last month, the group fully took over PrettyLittleThing, the fellow online retailer founded by Boohoo chairman Mahmud Kamani’s son. The company had taken a 66 per cent share in 2017 and spent £270m on the rest. This is not the end of the buying, either: the £198m raised from shareholders last month will likely go to further takeovers, the company said, with “numerous M&A opportunities...likely to emerge in the global fashion industry over the coming months”.  

Previous acquisitions Karen Millen and Coast would have boosted overall sales but Boohoo has also upped its gross margin by 0.6 percentage points to 55.6 per cent. This was well ahead of the consensus estimate of 53.6 per cent. 

The retailer said its own strength came from people being unsurprisingly keen on “loungewear and athleisure” clothing, and it had focused on these areas. 

Jefferies analyst Andrew Wade said Boohoo’s sales model had been validated by its recent performance. “The result clearly demonstrates the virtues of Boohoo’s nimble model – leveraging its flexible supply chain, and rapidly evolving both marketing content and product ranges to drive superior growth,” he said. 

The company has guided to revenue growth of 25 per cent for the full year and an adjusted cash profit margin of 9.5 to 10 per cent. This would see its revenue top £1.5bn after climbing 44 per cent between 2018 and 2019.