boohoo.com Plc (LON:BOO) has traded strongly across all regions in the four months to 31 December, including the Black Friday weekend and key peak season Christmas period. Headline sales growth was 55% (52% CER), with the USA delivering standout growth of 230% (188% CER) to £19.6m. UK growth at 31% is in line with previous quarters adjusting for the wholesale business (annualising the start of this business). As a result, management have increased FY17 guidance for boohoo sales growth to between 43% and 45%, against previous guidance of between 38% and 42%. Overall group revenue growth, including the two month contribution of PLT, is expected to be 46% to 48% with group EBITDA margin between 11% and 12%.
The continued investment in price and promotions, the broadening product range (e.g. launch of kids wear) and success of the boohoo brand at offering the latest fashion trends, continues to drive significant improvements in customer loyalty and lifetime value. All of this is reflected in the continued impressive increase in active customers of 31% YoY to 5.1m. Since the period end, the PLT acquisition has completed and there remains the proposed acquisition of Nasty Gal in the US which will be governed by a court-approved bidding process, expected to complete in February.
New FY17 and FY18 sales forecasts. Pre PLT consolidation, our boohoo FY17 sales estimate increases by 3.3% to £282.5m (prior £273.6m), implying 44.6% YoY growth (full year guidance is for 43% to 45%). In FY18 sales for boohoo increases by 3.6% to £351.2m (prior £338.9m), implying a growth rate of 24.3%. At a Group level, we are now forecasting FY17 sales of £288.7m (prior £280.4m) and FY18 sales of £404.3m (prior £392.1m), delivering 47.8% and 40.0% respectively.
New EBITDA forecasts. Our FY17 Group adj. EBITDA forecast increases by 5.8% to £33.3m (prior £31.5m), a margin of 11.5% (guidance is between 11% and 12%), and by 2.8% to £39.7m (prior £38.6m) in FY18, implying a margin of 9.8%. We are forecasting EBITDA margin of 9.8% for FY18 as we expect boohoo to continue to invest significantly in growth and the customer proposition in order to maintain current momentum and continue to take market share, as well as the dilutive impact from PLT which we expect to deliver 3% margins as the business continues to grow (for FY18, we conservatively assume 25% sales growth for PLT to £53.1m).
The company continues to deliver premium growth and premium margin. The revised guidance for sales growth and margin demonstrates the strengths of the boohoo’s brand led model over established peers such as ASOS and Zalando who are growing at c.25% delivering single digit EBITDA margins of c.7%.
Investment to support long term growth. Progress continues towards a further warehouse extension at Burnley while investment in IT infrastructure continues. The USA website was moved to a new platform in October, and the mobile apps in the UK and internationally continue to grow in popularity.
boohoo.com plc Mahmud Kamani and Carol Kane, joint CEOs, commented: “Trading in the four months to 31 December 2016 has been strong across all regions. Our strategy offering great pricing, enticing promotions and an ever-broader range of the latest fashion continues to drive growth and enhance customer lifetime value. In particular, sales momentum in the USA has continued robustly, helped by our strong customer proposition across the Black Friday weekend.
We are delighted to have completed the acquisition of a majority stake in PrettyLittleThing on 3 January 2017 and we welcome the team to the enlarged boohoo.com group. This is a fantastic brand to complement boohoo.com’s own brand, and we look forward to building on its success.
Progress is being made towards a further warehouse extension at Burnley to support growth in the longer term and investment in our IT infrastructure continues. The USA website was moved to a new platform in October and our mobile Apps in the UK and internationally continue to grow in popularity.
As a result of the strong trading through Black Friday continuing into the Christmas season, we now expect revenue growth for boohoo.com (excluding PrettyLittleThing) to be between 43% and 45% in the year to 28 February 2017, above previous guidance of between 38% and 42%. As previously announced, PrettyLittleThing is expected to achieve revenue growth in excess of 150% for the year to 28 February 2017 (FY16 revenue: £17.0m), while being broadly breakeven at EBITDA level. Consequently, group revenue growth, including PrettyLittleThing, is expected to be between 46% and 48% and group EBITDA margin between 11% and 12%.”
