Shares in pure-play online fashion purveyor Boohoo (BOO:AIM) bounced up 6.5p (2.2%) to 306p after the Manchester-headquartered retailer hailed ‘a record performance’ across the Black Friday weekend.

Shares recently flagged Boohoo as one of our key clothing sector picks here, and today’s unscheduled update reassured the market that the positive momentum is being maintained.

RAISING SMILES

Boohoo confirmed trading has remained strong across its key brands – the original Boohoo label, its ‘vibrant fashion brand’ PrettyLittleThing and ‘free-thinking’ brand Nasty Gal - since the 31 August half year end ‘with a record performance across the Black Friday weekend’.

Expectations heading into the annual festive spending jamboree were subdued, yet the latest BRC-KPMG Retail Sales Monitor revealed November’s like-for-like retail sales increased 0.4% when adjusted for this year’s later timing of Black Friday. Furthermore, transaction volumes soared on Cyber Monday according to data collected by Barclaycard.

GROWING LIKE TOPSY

Boohoo added that both warehouses (in Burnley and Sheffield) have had ‘a strong operational performance’, while the John Lyttle-led retailer ‘continues to trade comfortably in line with market expectations’.

Current consensus is for impressive revenue growth of 37.6% to £1.18bn and adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of £117.7m, a margin of 10% in line with guidance.

Encouragingly, newly acquired brands Karen Millen, Coast and MissPap have been successfully integrated onto Boohoo’s scalable online platform with initial ranges having been ‘very well received’.

READ MORE ABOUT BOOHOO HERE

Boohoo continues to deliver earnings upgrades and its financial performance and momentum is all the more impressive given the apparel market backcloth and the recent troubles facing sector peer ASOS (ASC:AIM).

Annual sales now exceed £1bn and a cash generative model and £207.4m net cash pile at last count mean Boohoo can reinvest back into the business and acquire new brands that can be plugged into its core infrastructure.

Shore Capital is happy to reiterate its ‘buy’ rating on what it dubs ‘a key disruptor in UK clothing’. The brokerage commented: ‘In our view, the Boohoo group has momentum and continues to leverage its multi-brand platform. With seven brands in the portfolio the company is starting to resemble Inditex (owner of Zara) with a stable of eight high street brands.’

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Issue Date: 03 Dec 2019