Boohoo revealed impressive full-year figures this morning. Revenue jumped by 44% to £1.23 billion – slightly above guidance, while pre-tax profit rose by 54% to £92.2 million.
Boohoo share price set to continue rebound
The UK unit saw revenue increase by 39% while the international operation registered a 51% rise. The overseas division now accounts for 45% of total revenue, and this should help the company in the long run as geographical diversification will lower risk. Today’s update should see Boohoo’s share price continue to rebound from last month’s sharp fall.
Gross margins slipped by 70 points to 54%, and that was blamed on the company investing in growing new brands, so some teething problems are to be expected. Boohoo ended the last financial year on a high note, and that positive momentum was carried into the first few weeks of this year. The health crisis initially had a negative impact on sales, but things have picked up again as people have adjusted to the new environment.
The fashion house has a ‘robust’ balance sheet. It has £240 million in cash, which is an increase of 26% on the year, so it’s liquidity position is healthy. On account of the Covid-19 uncertainty, the group has not issued guidance.
Retailer strikes winning formula
For a stock in the retail sector, Boohoo’s share price had enjoyed an impressive run in recent years. The stock hit an all-time high in January – which not many London-listed companies can boast. The firm seems to have the winning formula, as fashionable clothing and essentially an online-only operation are helping the company standout from others in the industry. E-commerce has taken off in recent years, particularly with younger shoppers, and that’s Boohoo’s target market.
In January, the Boohoo share price received a nice boost when the group posted a 44% increase in revenue for the Christmas period. On account of the impressive trading over the holidays, it’s full-year revenue guidance was lifted to 40%-43%, while the previous forecast was for between 33% and 38% growth.
Boohoo entered the pandemic in a strong position, so it stands to reason that it should weather the storm better than most of its competitors. Traditional high-street retailers find it tough to compete with Boohoo, with it essentially being an online-only group – so costs are relatively small as it is not burdened with expensive rents for stores.
The government-imposed lockdowns should give Boohoo even more of an edge over its rivals because high streets have become ghost towns. Earlier this month, ASOS revealed a 21% rise in first-half revenue, but sales in recent weeks have fallen by 20-25% on account of the Covid-19 crisis, so consumer sentiment clearly took a knock because of the health crisis. Once things go back to normal, Boohoo should be well positioned as many of its competitors will be licking their wounds from the health emergency.
The Boohoo share price slumped from roughly 330p in mid-February, before the coronavirus took hold in Europe, to 133p in the middle of last month. Since the lows of March, the Boohoo share price is up approximately 103% - which is a massive rebound. Should the stock continue to rally from current levels, it might seek to retest the 300p zone.