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Boohoo doubles sales and profits

Boohoo group has almost doubled sales and profits for the 12 months to 28 February year on year.

The Manchester-based fast fashion etailer has today reported revenues up 97% to £579.8m and gross profit up 90% to £306.4m. It said it had strong revenue growth across all geographies during the year- the UK was up 95% and international was up 99% compared with 2016/17.

Adjusted group EBITDA was up 60% to £56.9m. However, gross margin fell 180 basis points to 52.8%.

Boohoo said the drop in gross margin was driven by “planned investments in the customer proposition”- which included lowering prices in overseas markets and competing with a “highly promotional environment” in the UK. 

Net cash at the end of the year was £133m, up from £58.4m in 2016/17. 

Neil Catto, Boohoo CFO, told Drapers the “multiple brands all taking market share in multiple countries” led to the stellar performance: “The right product is the basis to everything and the price has to be right too. Fantastic service is also key in getting people to shop with you more.

”We want to see growth coming from loyal customers coming back more frequently and with bigger baskets.”

He added the business was not looking to acquire more brands in the “immediate future” and the priority for the coming year was to improve the current customer proposition.

“We need to give customers what they want. We want faster delivery, cheaper deliveries and better service. If the service is better we will increase that shopper frequency,” he added. 

Revenue for the main Boohoo fascia was up 32% to £374.1m, but gross margin fell 330 basis points to 51.2%. 

At PrettyLittleThing revenue was up 228% year on year to £181.3m, but gross margin slipped from 57.2% to 55.2%.

Revenue at Nasty Gal hit £24.4m since relaunching on 1 March 2017. Gross margin for the year was 59.6%.

The group’s distribution centre extension was completed during the year and now has capacity for more than £1bn of future group operation.

The number of active customers at Boohoo and PrettyLittleThing were up 22% and 128% respectively on last year.

During the year the Boohoo website moved to new platform across all markets, improving stability, flexibility and performance.

In current trading the group said the first few weeks of the financial year had a “strong start”. Group revenue growth for the current 2018/19 financial year is expected to be between 35% and 40%, adjusted EBITDA margin between 9% and 10% and capital expenditure between £50m and £60m.

PrettyLittleThing will move into its own third-party managed warehouse in Sheffield in the first half of FY19.

Joint CEOs Mahmud Kamani and Carol Kane said: “Our strategy will remain focused on providing the best fashion at great prices coupled with excellent customer service. To this end we have a plan of continuous investment in systems and technology to ensure we offer an optimal online shopping experience.

“International expansion will continue as we add more country-specific websites, refine our brands’ customer proposition, and raise brand awareness through marketing and social media. Our extended distribution centre, which will have a significant element of automation to drive efficiency savings, is scheduled for operational use in early 2019.

“PrettyLittleThing [moving to its own] warehouse … represents a significant milestone as we develop a distribution network capable of generating £3bn of net sales globally.”

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