Boohoo slowdown? No chance as sales guidance is revised even higher
today Sep 5, 2019
These days, when UK fashion retailers issue unexpected updates revising their sales or earnings guidance, the headline usually contains the words “profit warning”. So when on Thursday Boohoo Group issued such an update there was a millisecond where we thought that the company might have seen a slowdown.
Has it? Of course not. While Boohoo’s seemingly unstoppable growth may one day start to falter, it’s not happening yet and the company continues to defy the tough times. It issued an update that saw it actually raising its sales guidance for the first half of its financial year, although profits expectations remain unchanged due to the heavy investment the acquisition-hungry firm is making.
The pureplay e-tailer said that “performance has been ahead of expectations with strong revenue growth driving operating leverage across key brands. Consequently, the board now anticipates that results for the current financial year will be ahead of previous guidance.”
And the figures it’s expecting are certainly impressive. Group sales growth is now forecast to sit between 33% and 38%, massive leap compared to previous guidance of a 25% to 30% rise.
As mentioned, profits guidance isn't being changed and the board anticipates that EBITDA margins for the financial year should remain at around 10%, in line with previous guidance, “reflecting anticipated investments across the financial year into the three brands acquired by the group in the first half.”
The 13-year-old company undeniably has plenty to spend its investment cash on in the months ahead as the Karen Millen and Coast brands it acquired a few weeks ago, and the MissPap brand it bought back in March, are given the full Boohoo Group treatment.
Karen Millen in particular still has a challenging time ahead of it as it shuts all of its stores globally and becomes an online-only label with its designs now being originated in Boohoo’s Manchester HQ rather than London, where it had lived since it was founded. It will be very interesting to see how that one pans out but it looks like we’ll have to wait a while before we get any comment from the Boohoo board about how that’s going.
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