Boohoo Group today reported a 20% rise in revenue in a first half that saw it relaunch acquisitions from Debenhams – as a department store and marketplace – to Dorothy Perkins, Wallis and Burton, former Arcadia brands. The retail group will soon add another launch with a new marketplace for its PrettyLittleThing brand.
Boohoo Group says that by adding brands it has grown its potential customers to 500m – where it currently serves 19m active customers around the world – and it has built the infrastructure to support net sales of £4bn a year. The group will build a distribution centre in North America next year, in order to support sales to the market.
Boohoo Group reported revenue of £975.9m in the six months to August 31. That’s 20% up on the same time last year and 73% up on the same period in 2019, before the pandemic. UK sales accounted for 58% of group revenues, having grown by 32%.
In the US market, sales were 24% ahead of last year, but those to the EU were 15% lower. Sales to the rest of the world fell by 16% on last year, as airfreight to Australia, New Zealand and Canada reduced and shipping times lengthened.
Pre-tax profits of £24.6m were 64% down on the £68.1m that it reported last time.
During the first half of the year, the fast fashion group has integrated and relaunched four new brands, including the Debenhams marketplace. Warehousing and capacity has now expanded to the point where it could support £4bn in net sales. Next year the group will open a new distribution centre in North America.
Boohoo Group chief executive John Lyttle says: “We are delighted to have doubled our market share in key markets such as the UK and the 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 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.”
Digital strategy
Boohoo Group’s technology team has built digital platforms for its four new brands – with the Debenhams site built on a new headless solution that was chosen for offering increased customisation in the future, and which can also accommodate concessions run via a marketplace model. The new Debenhams site started with a small clothing range to which home and beauty ranges were added and, in June, a marketplace, with more partner brands now being added to the website. The Debenhams marketplace now has agreements in place with more than 50 brands – a figure that is expected to double in the next year. It has also struck an agreement with the Alshaya Group to take Debenhams to the Middle East market, one that it says will also give other group brands the opportunity to raise brand awareness in the region through a wholesale approach.
Brexit
Boohoo says it is seeing a “very pronounced” impact of the pandemic on customer demand in Europe – where sales fell by 15% on last year but were up by 20% on two years ago. The retail group says it is likely that Covid-19 testing requirements at EU entry ports and knock-on delays to delivery times have surpassed customer demand. It also says: “The imposition of duties on certain products over €150 from the end of the Brexit transition period, together with customs clearance costs an irrecoverable sales tax on returns have eroded margins. Gross margin declined from 57.8% to 53.6%.” It adds that changes in EU legislation and customs processes that came into force in July are likely to boost margins in the second half of the year, since they will reduce customs clearance costs and sales taxes on returns.
Sustainability
Boohoo published its sustainability strategy during the half year. To date it has started to install solar panels on its sites in Burnley and Manchester as it moves towards being fully powered by renewable energy. It has launched ‘ready for the future’ ranges of clothing made with sustainable materials – such as recycled and aims to have these account for 20% of its range by the end of the year. It is working with CottonConnect and one of its suppliers in Pakistan to train 2,500 farmers in more sustainable cotton farming methods, and it is developing resale and take back propositions, starting with the PrettyLittleThing marketplace, which launches next year.
Boohoo was founded in Manchester in 2006 and has since expanded through the acquisitions in 2017 of PrettyLittleThing and Nasty Gal, in 2019 of MissPap, Karen Millen, Coast, in 2020 Warehouse and Oasis, and so far this year of former department store brand Debenhams and of Dorothy Perkins, Wallis and Burton, which were run by Arcadia Group until its administration.
Boohoo.com is a Top150 retailer in RXUK Top500 research, while Karen Millen is Top100, and Coast is Top350.
