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Boohoo.com issues profit warning as sales slow

Boohoo.com has warned its full-year performance will be below market expectations, after heavy promotional activity on the high street drove its sales growth down to 25% in the four months to December 31, 2014.

This compared with growth of 31% during its first six months as a public company, to August 31.

Overall sales in the four months to December 31 were £50.8m. UK sales were up 25% to £34.2m, while Europe saw a spike of 35% to £6.5m and the rest of world grew 19% to £10.2m.

Gross margin was 59.9%, up 30 basis points on the year before.

Boohoo.com said it now expects growth for the second half to be in line with the four-month period to December 31, meaning the EBITDA margin will be in line with the first half at around 10%. 

In a statement, the etailer, which floated in March last year, said: “We announced in our interim results statement in mid-October that we had managed our marketing spend and growth in the early part of this period, whilst also delivering the successful implementation of the new warehouse management system and fully responsive website.

“Marketing was then increased to stimulate sales. However, the resultant growth was less than anticipated. We believe this was principally due to heavy promotional activity on the UK high street arising from the warm autumn season.

“In light of the prevailing sales momentum in the business, we expect the full-year results to be below current market expectations.”

The etailer ran promotions of up to 60% off in the run-up to Christmas.

Boohoo.com recorded 2.9 million active customers during the period, up 31% on 2013. It said demand on Black Friday (November 28) was 2.4 times its previous busiest day.

International pricing initiatives produced “encouraging results”, the etailer said, with constant currency growth of 20% in Australia and 41% in the US. Within the 41% constant currency growth achieved in the rest of Europe, France was particularly strong.

Joint chief executives Mahmud Kamani and Carol Kane said: “Whilst the period proved a challenging trading environment, we have still grown the business by 25%, albeit short of our previous expectations. We are very confident that our fashion credentials, pure-play online model and the significant investment in infrastructure will continue to drive growth in the UK and internationally.”

Boohoo.com’s new sportswear range BoohooFit will launch next week.

 

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