Source - SMW reports a strong performance in the first half of the year, with robust growth across all regions and continued momentum in new customer growth.

The group said revenue growth across all geographic regions continued at a strong pace. In the UK, its largest market, revenue growth was 38%, whilst in Europe growth was 41% (CER 41%). The US continued to grow very strongly at 93% (CER 81%) and rest of the world growth was 17% (CER 27%). Total revenues rose to £127.3m - up 40%  (41% CER).

Operating profits were up 135% at £14.0m. Adjusted EBITDA was £16.5 million (2015: £7.6 million), an increase of 117% on the prior year, and profit before tax was £14.4 million (2015: £6.3 million), an increase of 129%.

The group said currency exchange movements since the EU referendum had not significantly affected results due to foreign exchange hedges placed several months earlier in accordance with its rolling hedging programme, although weaker sterling does provide the opportunity to use promotional activity to generate incremental international sales over and above hedged transactions. 

But it says that with an element of many product prices being dollar-based, it remains to be seen what the longer term effect of continued sterling weakness might be in the supply chain.

Gross margin was 55.3% (2015: 60.1%) reducing by 480bps, of which 350bps was in line with its strategy of increased investment in price and promotions. 

A further 130bps was driven by a greater proportion of lower margin third party sales (revenue from other channels and wholesale sales to retailers). Retail gross margin was 57.0% (2015: 60.5%). 

Marketing expenditure decreased to 6.3% of revenue compared to 12.6% in the comparable half year, as the group stimulated growth through greater use of price and delivery promotions.

Joint chief executives Mahmud Kamani and Carol Kane said: "We are pleased to report a strong performance in the first half of the year, with robust growth across all regions and continued momentum in new customer growth.

"Our inclusive brand, unbeatable choice, together with our incredible prices and fantastic service, continue to inspire and appeal to young customers around the world. Through our constant focus on what matters to our customers, together with our investment in technology and operational improvements, we will continue to deliver profitable growth.

"As a result of our continued momentum in the UK and encouraging growth in selected overseas markets, we now expect revenue growth for the full year of between 30% and 35%, reflecting tougher second half comparatives.  

"Following the success in the first half of the year we will continue to look for opportunities to invest in marketing campaigns and our customer proposition to drive future sales growth and improve customer lifetime value. We will also be making significant investments in our IT systems and Ecommerce platforms. Consequently EBITDA margin for the full year is expected to be around 11%." 

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