boohoo: ‘better business than usual’

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Boohoo

Online fashion retailer boohoo has seen group revenue rise 40% in the four months to 31st December to £660.8m with growth across all brands and geographies.

John Lyttle, CEO, commented: “I’m delighted with the Group’s performance over the peak trading period. Our team worked exceptionally hard in 2020 as we navigated the many challenges, including the COVID-19 pandemic and the successful acquisition and integration of Oasis and Warehouse. Growth has been strong across our multi-brand platform and we have continued to grow our market share across all geographies. I’m pleased to be able to provide a further update on our Agenda for Change programme today, which demonstrates our ongoing commitment to transparency as we invest in our approach to sustainability and our supply chain for the benefit of all of the Group’s stakeholders. The Group is in an excellent position entering 2021, which we expect to be another year of progress towards our goal of leading the fashion e-commerce market globally.”

Industry reaction

Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown: “It’s even better business than usual at boohoo, with the group reporting an impressive 40% increase in revenue in the four months to the end of December. Its core, young demographic has shrugged off concerns surrounding the supply chain and working conditions scandal with aplomb. boohoo’s often astonishingly cheap price tags will have a lot to do with this – a £5 dress will do a lot to help customers reassess their priorities.

As we shop online more than ever before, boohoo has emerged as a favourite spot to snap up lockdown attire. boohoo’s nimble supply chain allowed it to pivot its offering quickly when tastes changed in favour of loungewear and pjs, which offered a serious boon.

And it’s this fast fashion mindset that landed the group in some hot water. Sir Brian Leveson, who was drafted in to provide independent oversight of boohoo’s efforts to turn its supply chain management around, said implementing the amount of change needed isn’t straightforward, and there is plenty of work to be done. But he acknowledged that boohoo was now on the right road. This is important, because while medium term business performance looks well set, the long-term investment case rests on there being sufficient quality of management and corporate governance in place.

In the core business, while sales are booming, its facing an industry wide bugbear. Gross margin dilution is often a function of reducing prices, which tends to be a key tactic of boohoo. Its increasing volumes mean this issue doesn’t make its way down to depleted profit, which is why medium-term guidance hasn’t budged.”

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