# Boohoo Group A record Christmas drives upgrades

- Link: https://www.directorstalkinterviews.com/boohoo-group-a-record-christmas-drives-upgrades/412802676
- Published: 2020-01-15T07:27:47+00:00
- Author: Amilia Stone

**[Boohoo](https://www.directorstalkinterviews.com/company/boohoo/boo.l) Group has
delivered a stellar performance over the key Christmas trading period resulting 
in a further upgrade to FY20 guidance, its third since 5^(th) September. Strong 
growth has been seen across all brands in all key geographical regions. We note 
the excellent performance seen at the Group’s most mature brand boohoo, where sales
in the four months to December are up 42%, an acceleration on the 27% YOY growth
posted in Q1 and a continuation of the exceptional 41% growth seen in Q2 of this
year. Revised EBITDA margin guidance of 10.0% to 10.2% (previously c.10.0%) is after
accounting for investment in three brands acquired in the year and implies strong
underlying trading in the Group’s more established brands (boohoo.com PLT and Nasty
Gal). The Group continues to deliver an impressive cash performance, with £245m 
net cash at 31 December.**

 * **Record performance**: Group P3 revenue of £473.7m is up an impressive 44% YOY.
   All Group’s brands performed strongly in the period delivering market share gains.
   Boohoo revenue of £232.6m is up 42% YOY, with PrettyLittleThing +32% at £190.8m
   versus strong prior year comps, and Nasty Gal more than doubling prior year sales
   at £41.5m, +102% YOY. Newly acquired brands Miss Pap, Karen Millen and Coast 
   are said to be showing great promise, generating combined revenue of £8.8m in
   the period. Group gross margin of 53.5% is down 70 basis points YOY. Despite 
   this investment in gross margin and the start-up costs associated with the three
   brands acquired in the year, improved EBITDA margin guidance for FY20 of 10.0%-
   10.2% implies the Group’s core boohoo.com and PLT brands are achieving levels
   of profitability comfortably ahead of the medium-term 10.0% EBITDA margin guidance.

 * **Guidance upgraded**: Revenue growth for the year to 29 February 2020 is expected
   to be 40% to 42% (previous guidance of 33% to 38%) with EBITDA margin to be in
   the range of 10.0% to 10.2% (previous guidance of around 10.0%). This is the 
   third upgrade to FY20 guidance since 5^(th) September, equating to a cumulative
   EBITDA upgrade of more than 10% over the course of the year, after accounting
   for investment in new brands. Despite this, guidance feels consistently conservative
   with the current outlook implying Group revenue growth of just 28% in the final
   2 months to February. 

 * **Zeus Capital Forecasts:** We move our forecasts higher reflecting the upgrade
   to guidance. FY20E Group revenue of £1,209m is +2.7% versus previous forecasts
   with EBITDA of £121.9m +3.5% and EPS of 5.43p +4.0%. See exhibit 4 for detail.

 * **Valuation: **Trading at 58.7x FY20 PE boohoo boasts impressive growth, solid
   margins and a strong track record of consistently delivering against guidance.
   Current valuation is supported by a conservative DCF implying 6% upside.

Share on: