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No tears this Christmas for Boohoo.com

14 Jan 2020 / By: Anusha Couttigane

Youth fashion pureplay Boohoo Group has revealed stellar results for the Christmas period, with revenue ahead by 44% across all geographies for the four months to 31 December.

The company, which also owns Pretty Little Thing (PLT) and Nasty Gal following recent acquisitions, saw double-digit growth for both the period and YTD trading at Boohoo and PLT, with triple-digit growth at Nasty Gal (albeit from a smaller base).

That noted, while the business derived gross margins in the region of 52-54% for each fascia, margins declined slightly for the period – by some 130bps for PLT. Nevertheless, the company still expects full-year performance to come in ahead of expectations in February, with revenue growth now set to reach 40-42% (previously 33-38%) and EBITDA margin expected at 10-10.2% (previously 10%). 

Looking to regional performance, the US witnessed the strongest growth, with group revenue up by 57%, no doubt boosted by US-based Nasty Gal’s 102% rise to GBP41.5 million for the period. The company also performed strongly in its home market, with UK sales up 42% and the rest of Europe up by 57% (54% CER).

However, the Rest of World division remains a tiny proportion of the business, growing by just 13% to GBP37.7 million. This shows that Boohoo has got the formula right in its priority territories, but over-dependence on these could leave it vulnerable to any market volatility in the near future, with little to fall back on in the global sphere where rivals like ASOS have a much stronger presence.

We also expect the competitive environment for Boohoo to become much more fragmented in its domestic market as the likes of Missy Empire and Missguided continue to grow and the allure of rival it-items on social media threatens to dilute share.

Boohoo’s acquisitive strategy is helping the company to branch out from its core space, with new additions like Karen Millen and Coast enabling it to elevate the offer from pocket-money friendly fast fashion to higher quality garments for the working woman.

However, given the decline of these brands prior to acquisition, the company may still have some work to do to remedy brand perceptions and fully benefit from the strengths of these labels in formal and occasion wear.

That noted, these brands may help Boohoo to weather the trend towards slower, more sustainable fashion, by offering shoppers something they can consider investing in for longer-term use. Yet Boohoo’s portfolio will continue to focus on the fast fashion opportunity, with replacement and replenishment missions remaining the bread and butter of the business.


Anusha Couttigane

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