Stellar 2019 for Boohoo, current trading improves after early Covid-19 hit

By

Sandra Halliday

Published
Apr 22, 2020

Boohoo reported its much-anticipated full-year results on Wednesday and, perhaps more importantly, delivered a coronavirus update. The fashion e-tail giant said that while it had taken a hit to its sales during March, sales in April have been rising.

The first two weeks of its financial year that began on March 1 had seen its strong trading momentum maintained from the previous financial year. But trading proved "mixed" from mid March due to the coronavirus. That meant an initial "marked decrease in year-on-year growth”. But it added that the “performance has improved in more recent weeks and we are now seeing improved year-on-year growth of group sales during April”. 

However, it remains “cautious regarding our outlook”, although it seems to be generally confident about the future and said that it has stress-tested its liquidity under various scenarios. It’s comfortable that it has “sufficient financial headroom, benefiting from its largely variable cost base, low cash burn rate and strong balance sheet with £241 million of net cash at year end”.

Following press reports concerning workers worried about inadequate social distancing measures, the company also said that it has “been following all guidance regarding self-isolation, social distancing and personal hygiene. The vast majority of our office-based teams are now working remotely. Our fantastic warehouse teams have adapted to completely new ways of working to ensure that they abide by all the social distancing procedures that we have in place. We are in constant contact with them and are working day and night to ensure that everyone is following the new systems, has what they need and, most importantly, that our teams are happy and healthy. Their ongoing safety and wellbeing is our number one priority”.

It also said it’s “standing alongside our suppliers, continuing to pay them promptly with industry-leading payment terms for all of their orders. We have also set up an emergency fund to help suppliers through this difficult period”.

CEO John Lyttle said that while recent events “have understandably overshadowed what has been a great year for Boohoo, they have also highlighted its key strengths. Our business is founded on our ability to be agile and flexible and it is at times like this when these abilities are tested. Although there is near-term uncertainty in the markets that we operate in, the group is underpinned by its incredibly strong balance sheet and is well-placed to leverage its scalable multi-brand platform and to continue to disrupt fashion markets around the world”.

LAST YEAR'S NUMBERS

So, on the assumption that business will one-day get back to normal, what exactly happened at the company last year? In the 12 months to February 29, its revenue rose 44% to just under £1.234 billion. Gross profit rose 42% to £666.2 million, but the gross margin fell to 54% from 54.7% as it “invested in growing our brands”. Adjusted EBITDA was up 50% to £126.5 million and pre-tax profit rose 54% to £92.2 million. 

It saw strong revenue growth across all geographies with the UK up 39% and international up 51%. International revenue is now responsible for 45% of its total, up from 43%.

Boohoo brand revenue rose 38% to £600.7 million with the gross margin down 30bps to 52.6%. PrettyLittleThing revenue rose 38% to £516.3 million with the gross margin of 55.6% down 100bps. Nasty Gal revenue surged 106% to £98.8 million but the gross margin of 54.2% was down 250bps.

It also said active customer numbers surged in high-doubled-digits for all three of its legacy brands, but it didn’t specify the performance of its acquired brand MissPap, Karen Millen and Coast brands that are still in their early stages as part of Boohoo.