Boohoo profits and revenue rise as PLT and Nasty Gal shine

In the year to 29 February 2019, pre-tax profit was up 38% to £59.9m on revenue of £856.9m, up 48% on the previous year, beating analysts’ expectations of 43% to 45% growth. Adjusted diluted earnings per share increased 29% to 4.15p and the company had net cash of £190.7m at year-end versus £133m the year before.

The group’s gross margin improved by 190 basis points to 54.7%.

There was good revenue growth across all geographies, with UK revenue up 37% and international up 64%.

In terms of its brands, revenue at PrettyLittleThing jumped 107% to £374.4m, while Nasty Gal saw revenue grow 96% to £47.9m and Boohoo sales were up 16% at £434.5m.

The group said its market share is increasing, supported by an "engaging" social media presence and celebrity endorsements. It now 5.9 million followers on Instagram, 2.9m Facebook fans and 0.5m followers on Twitter.

Boohoo said trading in the first few weeks of the financial year has been encouraging and group revenue growth for the financial year is expected to be between 25% and 30%, with an adjusted EBITDA margin of around 10% and capital expenditure in the region of £50m to £60m.

The company is targeting sales growth of 25% per year, with an adjusted EBITDA margin of around 10% over the medium term.

Chief executive officer John Lyttle said: "I am very excited to have joined the boohoo group at this key stage of its growth, with the group's disruptive and proven business model having delivered yet another excellent set of financial and operational results. In my short time within the business, I am delighted to have been able to meet a number of hugely talented people and have already been able to see many parts of the business.

"This has confirmed my belief and optimism that the group's investments into its brands and infrastructure have allowed it to develop a scalable multi-brand platform that is well-positioned to disrupt, gain market share and capitalise on what is a truly global opportunity."

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "The pain facing retailers is rife, from traditional bricks and mortar brands, to the likes of online players. Once again Boohoo looks to be bucking the trend by posting shining revenues and profits, and all at an improved margin.

"The group’s ability to keep taking market share from competitors comes from a successful blend of excellent social media engagement, scalable platform model and a strong track record when it comes to executing operational changes. Unlike rival ASOS, Boohoo’s recent warehouse upgrades have gone without a hitch - arriving on time and on budget, avoiding costly order backlogs.

"Boohoo’s storming of the fashion stage has been impressive and the group’s pledged to grow sales at 25% a year. The challenge is, the emphasis is being placed on smaller brand PrettyLittleThing, as growth in Boohoo’s own branded clothes hits the brakes. Margin improvements have also been promised and it’s hard to see how the level of growth we’ve seen in PrettyLittleThing can be maintained without margins being pinched. With such ambitious targets in the line-up, Boohoo has plenty of spinning plates to keep an eye on."

At 0930 BST, the shares were up 2.3% at 222p.