Boohoo full-year pre-tax profits up despite discounting at rivals

• Pre-tax profits up 3%
• Group sales rise 27% £139.9m
• UK revenues up 33%

Adjusted EBITDA increased by 16% to £14.1m on an actual basis as the etailer benefited from the introduction of a petite range and the expansion of its plus-size offer.

Revenue was up 27% to £139.9m. In the UK, which represents two thirds of group turnover, sales were up 33% after a strong first half but a more “moderated” second half.

“The lower second half growth rate was impacted by heavy discounting by UK high street retailers arising from the warm autumn season,” Boohoo said. The etailer was forced to issue a profit warning in January after intense discounting on the high street.

Revenue in the rest of Europe grew by 39%. Boohoo said that “despite the impact of the weakening euro, we were able to maintain momentum by re-pricing competitively”.

However Boohoo said revenue in its ‘rest of the world’ division was up 7% after being impacted by adverse currency movements in the first half, when revenues declined by 11%. However the etailer recovered after implementing a re-pricing strategy in Australia, resulting in growth of 29% in the division in the second half.

Gross margin was 60.8% “in spite of investing in our pricing proposition globally and adverse exchange rate movements”, Boohoo said. 

Boohoo joint chief executives Mahmud Kamani and Carol Kane said:  “We are pleased to report a year of significant progress on so many fronts.  While delivering a result in line with our revised guidance, we have also taken major steps operationally to ensure Boohoo is prepared for the anticipated growth ahead.

“Our customers’ reaction to our product ranges across markets continues to be very encouraging and we are excited by our new launches including petite, fit and forthcoming tall collections and the success of our rapidly growing plus-size collection.

 “We continue to invest in the brand as we develop in key markets (UK, Australia, USA, Ireland and France) where we see the greatest long-term growth potential.

“As we focus on growth and creating value for our shareholders, we have made the investment to support the business including new systems, an expanded warehouse and enlarged and stronger teams.

“We remain confident in our proven business model and in the continued development of the online fashion market globally in which we are steadily increasing our market share.”

Looking forward

Boohoo said it had experienced a “good start” to the new financial year.

“Overall, the business continues to trade in line with management’s expectations,” Boohoo said. “Looking forward, we will continue to focus on our four pillars of growth, both in the UK and abroad, in order to strengthen our brand and create long-term value for our shareholders.

Speaking to Retail Week, Kane said: “We’ve been getting quite a lot of momentum back in the business since the profit warning in January.”

Kane said the launch of its new #WeAreUs campaign in March has helped to inject this momentum back into the business. She said there was a direct correlation between increased marketing spend and site visits.

“We’re pretty confident in some of the results we’ve seen to the new range extensions and the marketing has been very well received. It’s very very early in this financial year, but the results so far are positive.”

In the next three weeks, the etailer will also launch a small edit on Asos which Kane said is about tapping into additional customers.

“It’s another channel for us,” she added. “Asos is a very small edit, it’s a taster and whether they buy directly through Asos or Boohoo, who knows?”