Fast fashion giant boohoo has seen revenues jump 41% in the year to February 2021, rising from £1.23bn to £1.74bn. The online retailer generated profits of £124.7m on the sales.
The figures are all the more remarkable as they are set against the backdrop of increased Covid-security costs, a raft of acquisitions – including that of Oasis, Warehouse, Debenhams, Dorothy Perkins, Burton and Wallis, as well as the purchase of the remaining minority interest in PrettyLittleThing
– and the working conditions scandal that surfaced in late summer 2020.
The UK market continues to be the largest for the group, accounting for 54% of revenue (2020: 55%). Growth of 39% to £945.1m was strong across all brands, with the three new brands acquired in the prior year augmenting this growth as they built from a low base. The company’s multi-brand strategy continues to enable it to gain market share in the UK, through a more compelling consumer proposition.
The picture is slightly marred in Europe, where restrictions on movement and the effect of lockdowns impacted growth variably at different points in time across the continent. Revenue growth of 30% to £244.7m was good across all brands and all major countries, starting with exceptional growth rates in Q1, resulting from consumers shifting to online shopping during lockdown, and continuing with moderating growth in subsequent quarters.
Overall, return rates have been significantly lower than in the previous year, with some resumption to normal levels during easing of lockdowns. Gross margin declined from 58.0% to 56.2%.
The group’s highest territorial growth rates have been seen in the USA, however, as the brands’ momentum builds and market share increases. PrettyLittleThing, Karen Millen and boohooMAN continued to see strong growth, while boohoo and NastyGal grew well. With all brands supported by the success of social media outreach and the compelling customer proposition, boohoo USA revenue increased by 65% to £435.1m. Return rates have also been significantly lower than in the previous year.
Growth in the rest of the world has been moderate at 16% to £120.4m million, impacted by the delays in the distribution network caused by greatly reduced airfreight capacity. Gross margin declined slightly from 55.8% to 54.9%, a small reduction given the challenging conditions in overseas territories brought about by the pandemic.
Boohoo has also done much to address the scandal surrounding its supply chain across the year and is starting to see not only positive publicity, but also has managed to ameliorate the impact on sales.
The company took the allegations of malpractice and poor working conditions seriously and immediately launched an in-depth investigation, appointing senior barrister, Alison Levitt QC, to conduct a thorough review of the supply chain in Leicester with a particular focus on the treatment of workers. As part of our commitment to deal with these issues in an open and transparent manner, the group published Ms Levitt’s report in full.
On receipt of the report, boohoo launched its Agenda for Change, a programme to ensure that it resolve the issues identified in Leicester and accepted all 17 recommendations from the Levitt report.
John Lyttle, CEO, comments: “FY21 has been a year of significant investment for the group as we build a platform for the future and I am very pleased to report a strong financial performance. Our established businesses have continued to grow across all territories as we gain market share with our compelling consumer proposition. We completed over £250m of acquisitions in the period, which included Oasis, Warehouse, Debenhams, Dorothy Perkins, Burton and Wallis, as well as the purchase of the remaining minority interest in PrettyLittleThing in a transaction that to date has resulted in substantial earnings enhancement for the group’s shareholders.”
He adds: “Our newly-acquired brands are being re-energised and made relevant for today’s consumer across a broader market demographic. We are very excited about their potential and are already seeing the early rewards from their growth. We have also invested in improving the oversight and transparency of our supply chain and we are committed to embedding positive change through our ambitious UP.FRONT sustainability strategy. As we build for the future, we continue to invest across our platform, people and technology to further cement our position as a leader in global fashion e- commerce.”