Boohoo bucks Britain's gloomy Christmas with strong sales

Reuters
FILE PHOTO: A shopper walks pass advertising billboards for Boohoo and for 'Pretty Little Things', a Boohoo brand, at Canary Wharf DLR station in central London, Britain, September 17, 2018. REUTERS/James Akena

LONDON (Reuters) - British online fashion retailer Boohoo (BOOH.L) bucked the trend of a tough Christmas for clothing retailers, reporting robust sales and raising its full-year revenue forecast.

Trading in the run-up to Christmas for British retailers was brutal, particularly for clothing groups, with discounting rampant across the market.

Boohoo's closest rival ASOS (ASOS.L) warned on its profit in December, while industry data last week showed British retailers suffered their worst Christmas since the depths of the financial crisis a decade ago.

But boohoo, which sells own-brand clothing, shoes, accessories and beauty products, said revenue rose 44 percent year-on-year to 328.2 million pounds in the last four months of 2018, beating analysts' expectations for growth of 41 percent.

Founded just 14 years ago in Manchester, northern England, boohoo has expanded quickly, listing its shares in 2014 and buying the PrettyLittleThing and Nasty Gal brands in 2017. The firm is tapping-in to a generation of younger consumers who shop on their mobile phones and share fashion tips via social media.

SHARES SLIP

Boohoo's shares were down 5 percent at 0955 GMT, giving back some of the 20 percent gains made since the start of the year. The decline reflected some disappointment that the full year sales forecast upgrade was not accompanied by a forecast for higher profit margins.

"Although this statement definitely justifies a large outperformance vs ecommerce in recent weeks, it doesn’t necessarily give a big further positive injection," said analysts at Barclays.

Analysts at Jefferies noted that in the four month period boohoo did fewer blanket promotions like the "20 percent off everything" that ASOS did, and more tactical promotions, such as "up to 60 percent off" reductions during Black Friday.

They said that drove demand in categories that had not sold well, like coats, resulting in a clean stock position.

"The global growth opportunity is significant and we will be addressing it in a controlled way – investing in our proposition, operations and infrastructure to capitalise on the opportunity," said joint chief executives Mahmud Kamani and Carol Kane.

The group saw revenue growth in all its regions, with Britain up 33 percent, the rest of Europe up 57 percent, the United States up 78 percent and the rest of the world 35 percent higher.

Boohoo forecast revenue growth for its 2018-19 year, ending Feb. 28 of 43-45 percent, up from its previous forecast of 38-43 percent.

It also forecast group adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) margins to be between 9.25-9.75 percent, narrowing from a previous forecast of 9-10 percent. All other forecasts were unchanged.

(Reporting by James Davey; editing by Louise Heavens and Keith Weir)