Boohoo “continues to outperform the wider retail market” says Zeus Capital plc

Boohoo Group has released a brief statement confirming ongoing strong trading across its key brands (, PrettyLittleThing, Nasty Gal and BoohooMAN) and another record-breaking performance over the all-important Black Friday weekend. Confirmation that the Group is trading “comfortably in line with market expectations” (FY20 company complied revenue growth consensus +37.6% YOY), implies growth at the top end of management’s guided 33% to 38% range. We upgrade our forecasts to reflect this, having previously sat at the mid-point of this range and the lower end of consensus. We see scope for history to repeat itself and deliver further upgrades in January, given management’s traditionally cautious stance ahead of peak December trading in contrast to ongoing momentum across the Group’s portfolio of brands.

  • Operational excellence:  Pleasingly, the Group’s operational performance has been strong at both the Burnley and Sheffield warehouses, with Black Friday being the first peak trading period since the automation of the Burnley site went live in late March. Automation should allow the Group to clear high order volumes quickly, allowing it to return promptly to business as usual trading for the key December trading period.
  • Acquisitions: The integration of recently acquired brands including MissPap, Karen Millen and Coast has gone smoothly, with all three brands successfully migrated to the Group’s platform. Karen Millen and Coast relaunched in October and these initial ranges have been well received. The Group is continuing to broaden product ranges, with the number of styles on offer already at levels seen prior to these brands’ entering administration, suggesting a quick and seamless integration into the Group’s supply chain.
  • Forecasts: We nudge our FY20 revenue forecasts higher (c.1.4%) reflecting today’s confirmation that the Group is trading in line with market expectations of revenue growth of 37.6% YOY and an EBITDA margin of c.10%, full detail is presented in Exhibit 1 below. We expect greater colour on the full year outlook in the next trading statement to be released on 14th January 2020 and believe there is potential for further upgrades to guidance, given ongoing momentum across the Group’s portfolio of brands.
  • Valuation:  The Boohoo Group continues to outperform the wider retail market as evidenced by its record Black Friday weekend. It’s track record of operational excellence also remains intact with another seamless peak trading period delivered successfully. We believe boohoo will continue to be an innovator and disruptor at the forefront of the fashion ecommerce market, backed by one of the most experienced and highest quality management teams in the sector and a solid balance sheet with forecast net cash of £260m for FY20.
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