Boohoo’s (BOO) decision to buy only the online operations of Karen Millen and Coast last month, leaving the high-street business in administration, looked like a confirmation of management’s belief in online retailing’s supremacy over bricks and mortar. Judging by the fast-fashion retailer's half-year results, it’s not hard to see why. The group broke £1bn in sales over the past 12 months, and beat profit expectations just a few weeks after it upped sales growth forecasts.
However, not everyone shares management’s belief. Despite a barnstorming performance, shares in the group were initially down slightly on the day of the announcement. Still, if the wheels are about to come off, we have yet to see the evidence. All of the core brands delivered double or triple-digit growth in sales and customer numbers, and the international business grew its share of revenues by three percentage points to 44 per cent. Cash generation was as strong as ever, with net cash of £207m at the end of the period.
The test will be the performance of Karen Millen and Coast. The integration of the two will be complete when the group relaunches the brands’ websites on its platform at the beginning of October, but then management must demonstrate its ability to grow the brands in a demographic outside of its 16-25 year-olds comfort zone.
Broker Peel Hunt is forecasting adjusted pre-tax profits of £100.8m for the full year, giving EPS of 5.9p, up from £76.3m and 4.2p last year.
| BOOHOO (BOO) | ||||
| ORD PRICE: | 268p | MARKET VALUE: | £3.12bn | |
| TOUCH: | 267.1-268p | 12-MONTH HIGH: | 289p | LOW: 146p |
| DIVIDEND YIELD: | nil | PE RATIO: | 61 | |
| NET ASSET VALUE: | 23p | NET CASH: | £207m | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 395 | 24.7 | 1.42 | nil |
| 2019 | 565 | 45.2 | 2.55 | nil |
| % change | +43 | +83 | +80 | - |
| Ex-div: | na | |||
| Payment: | na | |||
