Fast fashion has been hit hard by the Coronavirus outbreak and lockdown – but boohoo and its allied brands doesn’t appear to have got that memo.
Revealing its full-year results to 29 February 2020, the company saw revenue up 44% to £1.235 billion, across the group, with strong revenue growth across all geographies with UK up 39% and international up 51%. International revenue is now 45% of total, up from 43%.
Breaking it down across its allied brands, boohoo’s revenue grew by 38% to £600.7 million, on a gross margin of 52.6%, down 30bps. PrettyLittleThing also saw revenue up by 38%, hitting £516.3 million on a gross margin of 55.6%, down 100bps.
Meanwhile, Nasty Gal logged an impressive revenue growth of 106% to hit £98.8 million on a gross margin 54.2%, down 250bps.
While this was a stellar year for the group, early March saw sales waver as the pandemic took hold and lockdown was introduced. However, the retailer says that it has since seen things improve.
“Since the middle of March, trading has been mixed, as a result of the impact of the COVID-19 pandemic, initially with a marked decrease in year-on-year growth. Performance has improved in more recent weeks and we are now seeing improved year-on-year growth of group sales during April. We remain cautious regarding our outlook, as a result of the uncertainty caused by the COVID-19 pandemic,” a company statement says.
As a result of the uncertainty, the retailer has declined to offer any guidance on what it thinks its current year’s performance is going to look like.
However, the retailer stresses in its trading statement that: “The group has taken steps to understand, as far as possible, the risks and impact that the pandemic may potentially have on its operations, analysing a range of scenarios, factoring in a downturn in demand and the possibility of warehouse closures. Although it is not possible to predict precisely the impact from COVID-19, we have ensured that we have stress-tested our liquidity under these scenarios. From this, we are comfortable that the group has sufficient financial headroom, benefitting from its largely variable cost base, low cash burn rate and strong balance sheet with £241 million of net cash at year end.”
Commenting on the results, John Lyttle, CEO, says: “Whilst recent events have understandably overshadowed what has been a great year for boohoo, they have also highlighted its key strengths. Our business is founded on our ability to be agile and flexible and it is at times like this when these abilities are tested, and I am proud of how our colleagues and business partners from around the world have responded to the challenges posed by this pandemic. Although there is near-term uncertainty in the markets that we operate in, the group is underpinned by its incredibly strong balance sheet and is well-placed to leverage its scalable multi-brand platform and to continue to disrupt fashion markets around the world.”
Nigel Frith, a senior market analyst at www.asktraders.com adds: “Boohoo appears to be unbeatable. The online fast fashion retailer not only posted impressive final results to year end February 29th, but more importantly, the group has said that sales in April are ahead of last years. Not bad at all given the current lock down climate.”
He goes on: “Boohoo are proving to be a beacon of light in otherwise dark times. Whilst Boohoo haven’t provided any financial details on how they are coping with the crisis, investors haven’t deemed it necessary. Advising that they are operating with tightened safety measures at its warehouse and that it has set up an emergency fund to help suppliers. The stock price jumped over 4%.Boohoo’s reign looks set to continue even after lock down eases. Without a vaccine social distancing measures are likely to remain in place for some time to come, meaning reduced numbers in bricks and mortar shops. This can only be beneficial for Boohoo which continues to grab market share.”
Paul Kirkland, Director of Retail and Hospitality at Fujitsu UK agrees: “Boohoo has managed to prove itself consistently as one of the leading online fast-fashion retailers, so it is no surprise to see it posted strong results up until the recent disruption retailers have been facing globally. Boohoo, like most ecommerce platforms, has been perfectly positioned to cater for consumers’ desire for speed and convenience thanks to its agile supply chains. Similarly, ensuring the retail offering remains relevant and on-trend is something that online shopping platforms have done particularly well. While most retailers are finding this period challenging, Boohoo has built a brand identity that will no doubt help it weather the current storm.”
Hugh Fletcher, Global Head of Consultancy and Innovation at ecommerce consultancy Wunderman Thompson Commerce adds: “Boohoo’s online-only channel allows it to be agile; pivoting it’s offering where needed according to the latest fashion and social media trends. In the past year, Boohoo has tapped into influencers to appeal to an entirely new online audience, recruiting singer Ashanti and girl band Little Mix to be the face of its advertising campaigns; we found that over half (55%) of children aged 6 to 16 would want to buy a product if their favourite YouTube or Instagram star is using or wearing it.
Fletcher concludes: “But its recent successes ultimately hinge on the agility of its supply chain, and the ability to fulfil orders despite lockdown measures. As reports of declining high street footfall increase week on week, it will be retailers that can remain agile and flexible in the current climate that will weather the storm in the short- and long-term.”