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boohoo.com plc

boohoo.com plc Set for at least 50% growth yet again – Zeus Capital

A year of upgrades for boohoo.com (LON:BOO) has been topped by yet another sales and earnings beat. Full year sales of £295m are up 51%, with growth accelerating across all regions in H2. This impressive top line performance converted to a 90% increase in EBITDA to £35.6m and a 97% increase in PBT to £30.9m, driven by overhead efficiencies as the group grows. The complementary acquisitions of PrettyLittleThing and the Nasty Gal brand transform the business into a multi-branded proposition. This, alongside investment in range extension and impressive international expansion, underpins our expectations for continued strong growth of at least 50% top line throughout 2017. Active customers have risen 29% to 5.2m, with solid improvement continuing across all KPIs. Despite significant capital investment, totalling £30.7m in the year, boohoo’s balance sheet remains robust with net cash of £58.4m at the year end. We upgrade our FY18 expectations by c.12% and continue to see potential for significant profitable growth going forwards.

Revenue of £294.6m for the year to 28 February 2017 is up 51% (49%) YoY, marginally ahead of our expectations of £293.1m, upgraded at the February trading update. In the UK, the Group’s most established market, sales rose an impressive 33%. Growth was robust across all international markets with a notable 140% (119% CER) increase in the USA, accelerating on the 93% (81% CER) seen at the half year. Europe and the RoW also grew strongly, up 50% (44% CER) and 40% (42% CER) respectively. Operating profit jumped an impressive 101% to £30.3m with EBITDA 90% higher at £35.6m as the business leverages its overhead base. PBT and EPS were both 97% up YoY.

Upgrades to FY18 forecasts. Our FY18 group sales estimate increases by 9.4% to £442.3m (£404.3m), implying 50.1% YoY growth which is in line with guidance. Our FY18 adj. EBITDA forecast increases by 12.1% to £44.5m (£39.7m). This equates to a margin of 10.1%, again in line with guidance.

boohoo.com plc continues to deliver premium growth and premium margin. The outperformance and increased guidance demonstrates the strengths of 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%. We expect further outperformance as the brands continue to grow worldwide.

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