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Boohoo bounces back after January profit warning

Boohoo.com is “back on track” as full year sales grew 27% to £139.9m for the 12 months to February 28, while EBITDA rose by 16% to £14.1m.

The Manchester-based fast fashion etailer previously expected sales to reach £157.1m and EBIDTA of £19.3m but issued a profit warning in January, after heavy discounting on the high street slowed sales growth to 25% for the four months December 31.

“After the profit warning in January we have dusted ourselves off and got some momentum back in the business,” said joint chief executive Carol King. “We are at much better place than we were in January.”

Extending the ranges is one area where Boohoo is focusing, having launched a sport collection called Fit in January, a petite range in February and a plus-size collection last year. It will introduce longer leg lengths for women’s trousers in summer with a view to launching a tall collection in September or October this year.

The UK currently accounts for 70% of the business and sales increased by 33% during the 12-month period in the domestic market, while the rest of Europe was up by 39% and rest of the world by 7%.

Kane said after trialling in various international countries over the last year, the management team have decided to focus on fewer, key target countries including UK, Australia, US, Ireland and France. It delivers to 120 countries overall.

The company has also invested in increasing its warehouse capacity by 33%, which it expects to be complete by the middle of this year, and it has also implemented a new warehouse management system during the period.

Almost 100 head office roles were added at the firm over the year and 235 warehouse positions, taking its total headcount to 784 people.

It launched a fully responsive website in September last year and now 64% of traffic comes from mobile devices, up from 47% in 2014. “Our customer is constantly browsing on smartphones on the way to work, school or university,” said Kane, adding that active customers rose by 29% to three million compared with the previous year.

Boohoo also upped marketing spend through its We are Us campaign to levels seen in the first quarter last year as a percentage of sales, which she said had resulted in “a good start to the new financial year with improved momentum in the UK”.

Kane credited UK sourcing for the company’s ability to quickly react to trends: “We source approximately 50% of the collection in the UK and 50% overseas and a lot of our bestsellers are produced in the UK.

“In the UK our lead times can be as quick as a week but usually an average of four weeks, compared to six weeks overseas, so that helps us to stay ahead.”

@Tara_Hounslea

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