LONDON (Reuters) - Fashion retailer Boohoo (BOOH.L) raised its sales guidance on Wednesday as it beat forecasts with a 22 percent first half profit rise, underlining Britain’s rapid shift to online shopping.
Founded just 12 years ago in Manchester, northern England, Boohoo has expanded quickly, listing its shares in 2014 and buying the PrettyLittleThing and Nasty Gal brands last year.
British clothing retailers like Marks & Spencer (MKS.L) and Debenhams have seen profits slump and are closing stores, but pure internet players like ASOS (ASOS.L) and Boohoo are tapping-in to a generation of consumers who shop on their mobile phones and share fashion tips via social media.
Shares in Boohoo, which sells own-brand clothing, shoes, accessories and beauty products, largely to 16 to 30 year olds, were up by 9 percent to 209 pence at 0813 GMT.
The rise gives Boohoo a market capitalization of 2.39 billion pounds ($3.15 billion), which is some 20 times the equity value of the 240-year-old Debenhams (DEB.L).
Boohoo said its pretax profit was 24.7 million pounds ($32.5 million) in the six months to August 31, up from 20.3 million pounds in the same period last year, on revenue up 50 percent to 395.3 million pounds.
ASOS, which is 18 years old and unlike Boohoo sells third party brands as well, is due to update on trading on Oct. 17. Its shares were up 2.2 percent.
“All of our brands performed extremely well across all territories as we continue to gain market share,” said Boohoo’s joint CEOs Mahmud Kamani and Carol Kane.
Together the Kamani family and Kane own 36 percent of Boohoo’s equity.
PrettyLittleThing was the standout performer in the business, with its revenue soaring 132 percent despite the relocation of its distribution center to Sheffield, northern England, during the period.
The core Boohoo brand’s distribution center in Burnley is also being extended, giving the group a network capable of generating 3 billion pounds of net sales globally.
For the full-year to Feb. 28 2019, Boohoo forecast revenue growth of 38 percent to 43 percent, up from previous guidance of 35 percent to 40 percent, with adjusted EBITDA margin of between 9 percent and 10 percent.
Medium term guidance of sales growth of at least 25 percent per annum and EBITDA margin of 10 percent was also reiterated by the firm.
Last week Boohoo appointed John Lyttle, the current chief operating officer at Primark (ABF.L), as its new chief executive, with effect from March next year, on a pay package that could earn him almost 58 million pounds.
The package includes the possibility of a 50 million pound share plan payout if Boohoo’s market value hits 5.6 billion pounds in five years.
“With 11.7 million active customers across the brands, expanded distribution capacity, successful marketing campaigns, 41 percent of the business now outside the UK, and a rising cash balance on the balance sheet, boohoo seems very well positioned to continue its impressive growth trajectory,” said analysts at Jefferies, who have a “buy” stance on the stock.
On Tuesday clothing retailer Next (NXT.L) forecast flat profit for the full 2018-19 year after two straight years of decline. Its online business is growing strongly while sales at its stores continue to decline.
Next pointed to the problems this creates - as retail sales decline many fixed costs remain but as online sales grow its variable costs increase.
($1 = 0.7599 pounds)
Editing by Paul Sandle and Alexander Smith