Fast fashion etailer Boohoo says that its revenues were up by 20 per cent to £975.9m for the six months to August 31, although its pre-tax profits had dropped by 64 per cent to £24.6m.
During the period it had relaunched the Debenhams brand, as well as managed the integration and relaunch of the Dorothy Perkins, Wallis and Burton brands which are now housed in new London office. It also opened distribution centres in Wellingborough and Daventry, to support the next phase of its growth.
The business says that profitability was hit by short term factors relating primarily to the pandemic and by its investment in scaling its newly acquired brands. These include an increased marketing spend in key markets and absorption of higher shipping costs. However, its expectation is for full-year sales growth of 20 per cent to 25 per cent.
Chief executive, John Lyttle, said: “Looking back over the last 18 months the group has delivered an excellent operational and robust financial performance, and that is a testament to all who have helped deliver this.
“We are delighted to have doubled our market share in key markets such as the UK and US, have significantly expanded our target addressable market through selective acquisitions and are excited about the global potential for all of our brands.
“In the first half of this financial year, our teams have yet again delivered integrating four new brands, launching two new warehouses and strengthening our infrastructure in a manner that will allow our multi-brand platform to scale as planned.
“Entering the second half of the year, the group is well positioned to accelerate its growth and our confidence in the group’s medium term targets remain unchanged.
“We will continue to invest across our platform, people and technology as we look to further cement our position as a leader in global fashion eCommerce.”
However, Boohoo shares dipped in early trading, dropping 10.86 per cent by 9.30am to 228.20p per share.
Neil Shah, executive director at Edison Group, said: “Despite the high street reopening, young shoppers are still buying their clothes online – as a result boohoo has achieved another strong performance in Q2. The firm achieved 20 per cent year on year growth in the first half, very much in line with our expectations. The firm did suggest though that its performance in the second quarter was impacted by UK returns rates returning to pre-pandemic levels, physical stores reopening and consumer uncertainty as a result of Covid-19.
“While the firm’s results are positive on the surface, they may be overshadowed by concerns over its ongoing supply chain review. With this in mind, the firm’s relaunch of Debenhams, Dorothy Perkins, Wallis and Burton, alongside its additional distribution centres in Wellingborough and Daventry will help support its next phase of growth.
“Interestingly, the firm cited further progress in its agenda for change with the publication of UK and international supplier lists and new responsible sourcing team delivering supplier audits and compliance, as well as it adding more sustainable clothing ranges across its brands – a similar move made by ASOS and Primark. Overall, analysts are extremely bullish on boohoo as they believe the stock is highly undervalued – with this comes a strong opportunity for investors.”
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