Online fashion retailer Boohoo (LON:BOO) saw its shares rally on Wednesday, as the company posted strong results for the three months to 31 May, and and announced the acquisition of fashion brands Oasis and Warehouse.
Strong trading for online fashion
Regarding the company’s quarterly performance, the early stages of the calendar year saw strong trading for Boohoo, with sales jumping 45% year-on-year for the three month period, up to £367.8 million. The company added that it saw ‘strong’ underlying growth across its Boohoo, Pretty Little Thing and Nasty Gal businesses, with its newer brands – Karen Millen, MissPap and Coast – also trading strongly.
The group said it began the year with strong momentum, which was somewhat stifled due to changes in consumer habits and logistical difficulties during March and early April. This was followed by a marked improvement towards the end of April and ‘robust’ performance in May.
Boohoo said that its gross margin performance was strong, up 60 basis points year-on-year to 55.6%. It added that its test and repeat model allowed its teams to support the categories and trends which developed through the three month period, with areas such as loungewear and athleisure performing well.
Boohoo expanding the fleet
On Wednesday the company also announced the acquisition of the online businesses and intellectual property of online fashion businesses Oasis and Warehouse, for a combined cash sum of £5.25 million from Hilco Capital Limited.
The company said that its new acquisitions would be integrated into the Boohoo model, and would benefit from the company’s insight, infrastructure and supply chains – having already achieved aggregate unaudited revenue of £46.8 million for the financial year ended February 2020.
The Group added that it had successfully completed the purchase of the remaining 34% minority interest in prettylittlething.com Limited and expected the acquisition to be ‘significantly earnings enhancing’. It continued, saying that the acquisition represents an important step in its ambition to lead the fashion e-commerce market globally.
Commenting on the update, company CEO John Lyttle stated:
“During unprecedented and challenging times, the Group has delivered a very strong trading and operational performance. I am proud of how our colleagues and business partners from around the world have responded to ensure that we can safely bring to our customers the latest fashions, great value, fantastic prices and best in class service. Whilst there is a period of uncertainty within the markets in which we operate, the Group is well-positioned to continue making progress towards leading the fashion e-commerce market globally.”
Following the update, Boohoo shares bounced 8.32% or 32.40p, to 421.70p per share 17/06/20 12:19 BST. This is upwards of the consensus target share price of around 400.00p posted last week. The company’s p/e ratio stands at 64.67.
