Online fashion retailer Boohoo.com (BOO:AIM) is in the spotlight after hiking its sales growth guidance from 38% to 43%, for the current year to 28 February 2019. This represents a nudge up from the previous 35% to 40% target range.
The increased confidence follows another period of strong growth for the online fashion retail favourite of TV and sporting celebrities. Results for the six months to 31 August show a 50% surge in sales to £395.3m.
Investment in future growth initiatives saw profits increase at a more sedate, yet still impressive, pace. Pre-tax profit increased 22% to £24.7m.
HEFTY VALUATION
The figures are going down well with investors, the share price rallying more than 8% in morning trade to 207.5p.
The stock has offered a bumpy ride for investors over the past year largely because expectations have soared, pumping up the company's valuation and leaving the stock susceptible to disappointment even on largely positive news.
The shares are currently trading on a price to earnings (PE) multiple in excess of 50-times, based on Liberum's forecast earnings per share (EPS) estimate of 4.1p for the full 12 months.
This time last year the stock was trading at 258.75p, and it went as high as 265p in June 2017 following a stratospheric run.
OVERSEAS EXPANSION
AJ Bell investment director Russ Mould says investors should not be worried about the pace of growth, flagging its overseas operations account for 41% of group sales.
Mould believes new chief executive John Lyttle may buy the remaining 33% stake in PrettyLittleThing, one of the company's brands, which is touted to be worth £1.1bn by analysts.
Liberum analyst Wayne Brown says the sales beat was mostly driven by better than anticipated growth at PrettyLittleThing.
Despite the strong performance, Brown does not anticipate any material changes in forecasts, noting a potential headwind could be the cost of buying the remaining PrettyLittleThing stake.
