Boohoo rockets on pandemic boost, but return to normal looks good too
Boohoo Group’s results couldn't fail to impress on Wednesday as the company reported full-year figures for the 12 months to the end of February that many would envy.
Just look at the headline numbers: revenue rose 41% to £1.745 billion. Gross profit was up 42% to £945.2 million and the gross margin rose 20 basis points to 54.2%. Adjusted EBITDA rose 37% to £173.6 million, and profit before tax was up 35% to £124.7 million. Oh, and at the year-end, it had net cash of £276 million, which was over £35 million higher than the year before.
As you can see, it was a good year for the company as the pandemic drove more and more consumers to get their fashion fix online.
And it was a busy year aside from it simply selling more as it integrated and relaunched the Oasis and Warehouse brands on its platform, acquired the Debenhams online business, and also bought Arcadia’s Dorothy Perkins, Wallis and Burton brands. And while it acquired all those new businesses, it also added 18 million active customers (which was 28% higher).
But the year wasn’t one long triumph as supplier scandals made headlines worldwide. In reaction to this, the company has put an Agenda For Change in place and said that it made “significant progress” on strengthening and making its supply chain more ethical. It admitted that this remains a work in progress, but it has driven the agenda forward and expects to make further “great progress” in the coming year.
The year delivered strong growth across all geographies with UK revenue up 39% and international up 44%. International revenue now makes up 46% of its total, compared to 45% a year earlier.
The UK market continues to be its largest and that 39% revenue growth to £945.1 million proved it remains popular, despite all the negative headlines around its supply chain during the year. All brands contributed to its growth, including its new brands, although these were building from a low base. It said it continue to gain market share in its domestic market and saw small increases in basket size as it pivoted its offering to activewear, loungewear and tops, with return rates low.
In the rest of Europe, it called its overall performance “pleasing”. It saw revenue growth of 30% to £244.7 million with growth rates in the first quarter being “exceptional” but moderating in subsequent quarters. Costs relating to Brexit have had a small impact, but it hasn't seen any business interruption due to the UK's departure from the EU.
The company has seen the highest territorial growth rates in the US as its market share has increased. It called out PrettyLittleThing, Karen Millen and BoohooMan as having exceptional growth there, while the Boohoo and NastyGal brands rose strongly too. US revenue increased 65% to £435.1 million.
Growth in the rest of the world was more moderate at 16% to £120.4 million, impacted by delays in the distribution network due to greatly reduced airfreight capacity.
And while many companies are refraining from offering any guidance at present due to the ongoing uncertainty linked to the pandemic, the group said revenue growth for the current financial year is expected to be around 25%. Its acquired brands should deliver around five percentage points of this. It's no surprise therefore that it said trading in the first few weeks of the financial year has been encouraging, but it added that it expects the benefits seen from reduced returns over the last 12 months to begin to unwind this year.
That said, while the group clearly benefited from the pandemic insofar as many physical shops were closed and consumers were only able to buy online, it said that the bigger picture wasn't all about the benefits it got. It added that certain traditional core categories such as dresses and going out saw significant declines in the year. But of course, as many countries reopen, it's already seeing the early benefits of such categories reviving.
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