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Boohoo bucks retail trend as it posts 43% increase in revenue for the first half of 2019

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Boohoo basking in a sunny retail summer
Boohoo basking in a sunny retail summer
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Boohoo is getting retail right – growing 43% in one of the toughest climates ever: so what is it doing and what can you learn?

Online fashion powerhouse Boohoo.com continues to buck the flagging retail trend posting a staggering 43% increase in revenues for the six months ended on 31 August 2019, to £564.9m over the period with the Boohoo and Pretty Little Things brands recording 34% and 43% increase in sales.

 

Nasty Gal has revenue more than doubled over the period. The international sales have grown 55% increasing the contribution to total revenue to 44%. The UK sales have also increased by 35%. New apps developed in house for boohoo, boohoo Man and Nasty Gal (that were released over the period) have contributed to the increase in sales.

 

Celeb endorsements from the likes of Jordyn Woods have played a big role in the bump in revenue.

 

The number of active customers over the period have increased 30% to 13 million, with an average spend of £43.26, also a slight increase, while adjusted profit before tax has a similar increase to the sales figure, growing by 45% to 51.8% whilst the earnings per share increased 78% to 2.48%. The automation of the Burnley distribution centre has contributed to increase the efficiency of the operation.

 

The company has also reiterated the guidance from earlier this month but mentioned that the medium-term target is for an organically sales growth of 25% with EBITDA margin of 10%. The company cash position will allow to acquire further complementary brands to increase the demographic it appeals to.

 

John Lyttle, CEO, comments: “It has been a fantastic first half of the year for the group. We have delivered significant market share gains across all of our key markets, and for the first time in our history, revenue has exceeded £1 billion in the last 12 months. We have delivered strong growth and operating leverage in our more established brands and will continue to invest in both our more established and newly-acquired brands. We enter the second half of the year well-placed and confident that our platform, which combines the latest fashion, great prices and excellent customer service, all underpinned by a well-invested infrastructure, will deliver further market share gains.”

 

Commenting on the results, Fiona Cincotta, senior market analyst at www.cityindex.co.uk says: "Boohoo has yet again surprised the market to the upside, this time by showing that it’s having no problem converting the kind of bumper sales growth it revealed three weeks ago into profits. The big jump in profit numbers shows that Boohoo isn’t growing sales at the expense of margins, which is no mean feat given the pressure being exerted on consumer confidence by Brexit uncertainty."

 

She continues: "Costs have been kept under control and the company’s celebrity-based marketing efforts are clearly hitting the spot, justifying the expense. Adjusted operating margins in the first half, at 10.8%, are tracking favourably compared to the company’s annual guidance of around 10%, boding well for the full-year result."

 

Looking at the company’s strategy, Hugh Fletcher, Global Head of Consultancy and Innovation at Wunderman Thompson Commerce, adds: “Boohoo’s impressive results have confirmed its elevation as one of the leaders in online fashion, as it has continued to expand in the UK and internationally. Its global multichannel operations have been used cleverly to create an experience that is fast and convenient, that the younger generations can buy into. As one of the leaders in the ‘fast fashion’ space, it has not only built a model that is successful right now, but also one that is ready for the next generation of shoppers, as a third of 6-16 year-olds say they lose interest in a product if they cannot get it immediately.”

 

Fletcher says: “What is more, Boohoo’s popularity has grown as a result of its successful model around influencer sponsorships. With 55% of ‘Generation Alpha’ saying that they would buy a product their favourite Instagram and YouTube stars are using, its partnerships with influencers are important in boosting its sales. And Boohoo has identified this as one of its strongest selling points. The introduction of new content such as its podcast series with Love Island star Maura Higgins, it’s only likely to increase its popularity among the younger generation. Undoubtedly, this model has given it the platform to continue to thrive in an ever-competitive online retail environment.”

 

Commenting on what makes Boohoo remarkable in the current retail climate, Angus Burrell, Head of Omni-Channel Solutions at Valitor says: “It’s clear from Boohoo’s financial results that the online retailer is steps ahead of its competitors. However, there are a number of reasons why Boohoo has recorded impressive 43% growth.”

 

According to Burrell, PrettyLittleThing, Nasty Gal and MissPap understand the needs of their customers and quickly adapt to new trends – and that means collecting and using data. “By collecting and processing the right data, Boohoo knows its customers incredibly well,” he says.

 

“Predominantly targeting the 16-24 age group, it has focused its marketing efforts on social media and successful e-marketing campaigns, as well as working with the right celebrity influencers, such as the stars of Love Island,” says Burrell. “This approach to understanding and communicating with customers in a way that elicits the best response may sound simple, but it is being missed by many of its competitors. In the future, Boohoo could take this a step further and using data from payments, build up a holistic view of its customers for an even more targeted approach. Ultimately though, its customers are buying into a culture - not just purchasing products. This is a powerful way to build a long term, lasting relationship.”

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