LONDON (Reuters) - British online fashion firm Boohoo reported a better-than-expected jump in profit on Wednesday, bucking a tough market for clothing retailers helped by its PrettyYoungThing and Nasty Gal brands.
The group, which targets 16 to 30-year-olds, reported a 49 percent rise in pretax profit to £76.3 million for its year to end-February. Revenue rose 48 percent to £856.9 million.
Shares in Boohoo, which recently hired John Lyttle from Primark to be its chief executive, rose 5 percent to a six-month high of 229 pence, valuing the company at £2.65 billion.
Founded 14 years ago in Manchester, northern England, Boohoo has expanded rapidly, listing its shares in 2014 and buying the PrettyLittleThing and Nasty Gal brands in 2017.
The firm is tapping in to younger consumers who shop on their mobile phones and share fashion tips via social media.
Boohoo’s results stand in contrast to several retailers with big store networks. Groups including New Look and Marks & Spencer are closing shops, while Debenhams collapsed into administration. Associated British Foods’ fashion chain Primark fared better with a 25 percent rise in first-half operating profit.
Boohoo is also outperforming its longer established online rival ASOS, which reported an 87 percent drop in first-half profit this month.
“As clothing players such as Topshop and New Look fail to convince young consumers to purchase, the Boohoo group has gone from strength to strength,” said GlobalData retail analyst Emily Salter.
PrettyLittleThing was the jewel in the group’s crown, she said, with revenue more than doubling to £374.4 million and set to overtake the main Boohoo brand in UK market share this year. Revenue at Nasty Gal rose 96 percent to £47.9 million while Boohoo saw revenue rise 16 percent to £434.6 million.
Lyttle said he was “very excited to have joined the Boohoo Group at this key stage of its growth”. He said the company was well-positioned to “disrupt, gain market share and capitalise on what is a truly global opportunity”.
Boohoo said trading in the first few weeks of its new year had been encouraging, and it expected revenue to grow 25 to 30 percent, with an adjusted core earnings margin of around 10 percent and capital expenditure of £50 million to £60 million.
Reporting by Paul Sandle; editing by Jason Neely