Key Numbers

Revenue was up 22% to £21.8m in the two months to 28th Feb. Up 13% to £14.5m in UK, up 32% to £2.9m in the rest of Europe, and up 56% to £4.4m in the RoW. Active customers up 29% so we can assume average ticket went down, GM was 58% due to promotions. Revenue up 27% to £139m in the FY with 33% growth to £94m in the UK, 39% to £18m in the rest of Europe, and 7% to £27.4m in the RoW. Marketing spend was held 10% ahead of sales and will increase towards levels seen in the first quarter of last year. Continuing investment in IT and infrastructure. £54m in cash, doing buyback. Increasing marketing spend in FY'16.

Analysis

Boohoo is a stock I really like right now. Management look good and are heavily invested, the stock looks cheap, and the business is clearly targeting growth. On valuation, something that appears to be poorly understood: today's market cap (after the 6% rise on these results and significantly above 22p where I first highlighted the stock) is £300m, we are getting £12-13m of steady state earnings and £54m of cash. So this is £184m, we are therefore paying another £116m for growth. The question I think investors should ask is whether the earnings from now into infinity with this business are worth £116m? I say yes.

So I think this set of results is decent, not great but really as expected. I am guessing PBT, as mentioned above, is coming in around £12-13m. This is largely as expected, slightly above my estimates but that is usually the case.

Two points are worth concern here. First, is that the company clearly had trouble shifting stock in this last period. GM was down, average ticket was down, and margins were clearly a bit worse than expected. There is no real detail on how, precisely, the company navigated this. The company does say that it focused on "conversion and profit margin", this doesn't square with running heavy discounts...I think. So I am not too sure how the company made up the margin but this performance is clearly disappointing. Second, UK sales growth was pretty slow in the last quarter. Again, this was probably due to promotions and such. Again, we have slightly less detail than we probably need.

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