Boohoo surges as it lifts FY sales guidance

Boohoo said in a trading update that it now expects sales growth of between 28% and 33% for the year, up from previous guidance of 25% to 30%.

“As a result of operating leverage in the business, the board currently anticipates improved EBITDA margins for the financial year and further guidance will be given at the interim results in September. The board continues to be positive about the trading environment for boohoo.com.”

The company also said that sell-through of seasonal stocks has been strong through the spring and summer season.

Independent retail analyst Nick Bubb said: “That looks like translating into an 11%/12% upgrade in EBITDA for year-end February from around £24m to just under £27m and, as the shares are still cheap relative to ASOS, the recent progress in the share price may well continue.”

Shore Capital said that following the update and a call with management, it has sufficient confidence to upgrade its expectations for the current financial year. The brokerage upped its revenue estimate for full-year 2017 from £251.5m to £257.1m.

“Investors can be enthused that Boohoo has demonstrated an ability to accelerate both revenue and earnings simultaneously during the period as well as about the cash-generative business model as a whole. We continue to be bullish about the company’s future prospects and we retain a 'buy' stance on the company," it said.

At 1145 BST, shares were up 8.2% to 80.62p.