Shares in online fashion group Boohoo (BOO:AIM) jumped over 7% to hit a new high of 417p after it said it expects annual performance to beat market expectations, following a jump in first quarter revenue.
In a trading update for the three months to 31 May, revenue jumped by 45% to £367.8m with sales from the middle of March to early April dented as lockdown started but having improved from then on with performance in May described as ‘robust’.
For its current financial year to 28 February 2021, Boohoo said it expects to deliver another year of ‘strong’ profitable growth, with results ahead of market expectations.
Revenue growth was anticipated to be about 25% for the current financial year, with an adjusted operating earnings margin of between 9.5-10%.
The company has also swooped on high street rivals Oasis and Warehouse, announcing the acquisition of their online businesses for £5.3m in cash from retail restructuring specialist Hilco Capital, just two months after their collapse into administration.
BOOHOO ‘CONTINUES TO DEFY DOUBTERS’
AJ Bell investment director Russ Mould said the market reaction to its latest update shows Boohoo ‘continues to defy the doubters’ after its battle with short-seller ShadowFall and a backlash over executive pay.
Mould said, ‘Any scepticism over demand for its clothes in lockdown, on the premise that its targeted demographic no longer needs to dress up to go out, looks unfounded after a stunning surge in sales.
‘The company seems to have adapted to new realities – pitching loungewear and athleisure gear at its customer base to great effect.
‘Clearly online retailers have been in a very strong position, as with shops having been closed due to lockdown there has basically been nowhere else for people to go.’
He noted the acquisition of Oasis and Warehouse for ‘what in relative terms is small change’ and added it shows the company ‘still has plenty of cash for bolt-on acquisitions that it can feed into its central operating platform.’
While consumers’ willingness to spend has been impressively resilient, Mould said the big question for Boohoo is ‘whether this can continue when the full economic fall-out (of coronavirus) feeds through.’