Boohoo sales surge in Q1, but some markets are challenged
Boohoo’s trading update on Tuesday showed that the pureplay e-tailer continued to prosper in Q1, even after physical stores reopened in Britain in April, although there remained challenges in some markets and margins were squeezed.
The three months from March to the end of May saw total revenue reaching £486.1 million, up 32% year-on-year. And it saw revenue up 91% compared to the same period two years ago, an interesting comparison with the last ‘normal’ Q1 and a sign of just how big Boohoo has become in the subsequent 24 months as it has acquired a large basket of brands.
In the UK alone, revenue reached £274.6 million, up 95% on a two-year basis and 50% year-on-year. And it fared well in the US where the two-year figure was a rise of 157% and the one-year figure was 43% up, or 40% currency-neutral. That meant it saw £131.9 million in revenue in that market.
But one-year comparisons were tougher elsewhere. In the rest of Europe, revenue may have risen 43% compared to 2019, but it was down 14% (or -12% currency-neutral) at £54.7 million compared to a year ago.
It also saw a dip on a one-year basis in the rest of the world. Looking at the two-year figure, it was up 3% to £24.9 million, but it was down 15% compared to 2020, or -10% currency-neutral.
The gross margin for the three months was 55%, in line with two years ago but down 60bps against a strong comparative in the first quarter of last year.
The group, which owns its eponymous label, as well as PrettyLittleThing, Karen Millen, Oasis, Nasty Gal, Debenhams and more brands, said it made a strong start to its financial year “against challenging comparatives”. But “uncertainty remains in a number of markets that the group operates in around the world as a result of the pandemic”. Its guidance for the year to February 28 2022 remains revenue growth of around 25% and adjusted EBITDA in the region of 9.5% to 10%.
It was certainly a busy period for the business. The company said the latest quarter saw the successful integration of Arcadia’s Dorothy Perkins, Wallis and Burton brands onto its multi-brand platform and the launch of the new Debenhams digital department store, with fashion, beauty and homewares. Its distribution centre in Wellingborough also went live (with the Daventry site on schedule for operational use in Q2). And all of the group's London-based brands are now operating from its new offices in Soho.
Importantly too, the firm updated us with a further progress report from Sir Brian Leveson on its Agenda for Change programme. This is particularly important for Boohoo given the negative headlines last year over its supply chain. It said the report “highlights the excellent progress that the group continues to make”.
It has joined the Fast Forward initiative for auditing its UK supply chain, and it has published its full UK manufacturing list with a commitment to publish its global supplier list this September. Meanwhile, it continues to review its entire manufacturing supplier base.
It’s also launching a new sustainability strategy, called UP.FRONT, which it described as “a no-nonsense, set of measurable targets focused on clothes made smarter, suppliers on better terms and our business taking action”.
The new report also saw Sir Brian saying that “the Responsible Sourcing and Ethical Trade teams are now focused on continuous assessment of its UK manufacturing base and [it] is demonstrating a degree of due diligence which may well go beyond that which is undertaken by other retailers or in other industries”.
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