14th Dec 2016 07:54
LONDON (Alliance News) - boohoo.com PLC on Wednesday upgraded its full-year sales guidance following a strong Black Friday event, as it announced the acquisition of fellow online fashion retailer PrettyLittleThing for GBP3.3 million.
Since reporting its first-half results at the end of September, boohoo said it has continued to perform well, with strong trading across the Black Friday weekend last month and encouraging peak season trading in the run up to Christmas.
As a result, boohoo now expects full-year revenue to grow by between 38% and 42% year-on-year, against its previous guidance of growth between 30% and 35%.
In addition, boohoo expects to deliver an earnings before interest, tax, depreciation and amortisation margin of between 11% and 12% as it benefits from improved operating leverage. Previous guidance was for an 11% margin.
boohoo added that it has bought a 66% stake in 21 Three Clothing Co Ltd, which trades as PrettyLittleThing, for GBP3.3 million in cash. This price is in line with the option agreement that boohoo signed in 2014 to acquire 100% of PrettyLittleThing for GBP5.0 million.
The 34% stake retained by PrettyLittleThing's management will be subject to the management team remaining with PrettyLittleThing over the five-year period to February 28, 2022, and achieving revenue and Ebitda targets.
At that date, boohoo will have the option to acquire the remaining stake of women's fashion specialist at market value. boohoo will finance the acquisition through its existing cash resources.
In the financial year ended February 29, Manchester-based PrettyLittleThing made revenue of GBP17.0 million, up from GBP3.1 million the year before. In the six months to the end of August, revenue grew to GBP19.0 million from GBP6.4 million.
According to boohoo, PrettyLittleThing's revenue is expected to more than double in its current full financial year, while being broadly breakeven at Ebitda level.
boohoo plans to review and invest in PrettyLittleThing's operations and warehousing, expecting revenue to grow at a similar rate to its own in financial 2018.
"We believe this is an excellent opportunity to extend the group's overall customer appeal through two distinct, complementary brands while further enhancing the group's strong growth trajectory. We look forward to building on PrettyLittleThing's success, and we welcome Umar [Kamani - PLT's CEO] and his team to the group."
boohoo will provide a trading update for the four months ending December 31 on January 10.
By Karolina Kaminska; [email protected]; @KarolinaAllNews
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