11th Mar 2015 08:22
LONDON (Alliance News) - Online fashion retailer boohoo.com Wednesday said its UK sales growth continued to slow in the last two months of its financial year, although sales growth in Europe and the rest of the world accelerated, and it reiterated its profit margin guidance as it focused on protecting its margins ahead of increasing marketing spend later in 2015.
The retailer sweetened the news, saying it would ask its shareholders for authorisation to buy back up to 10% of its shares at its next annual general meeting after considering the levels of cash in the business. It had GBP54 million of cash on its balance sheet at the end of February.
Boohoo.com had issued a profit warning in early January after sales in the four months to the end of December came in below its hopes. It had blamed unusually warm weather in early autumn which forced UK fashion retailers to discount heavily. It had ramped up marketing to try and stimulate sales, but the resulting growth was less than it had hoped.
Its overall sales growth for that tough four month period was 25%, with UK sales up by the same amount. On Wednesday, it said overall sales growth was 22% in the two months to the end of February, and UK sales were up 13% to GBP14.6 million from GBP12.8 million.
Its performance outside the UK was better, although it was hit by the strength of the pound when revenue was translated back to sterling. Sales in the rest of Europe were up 32%, but would have been up 46% if exchange rates had remained constant, while sales in the rest of the world were up 56% on the year, but would have been up 59% at constant exchange rates.
The figures mean that boohoo.com reported sales growth of 27% for the whole of the financial year to the end of February, to GBP139.9 million from GBP109.8 million a year earlier. UK sales were up 33% for the whole year to GBP94.3 million from GBP71.0 million, while rest of Europe sales rose 29% to GBP18.1 million and rest of world sales rose 7% to GBP27.4 million.
"The Rest of Europe continued to perform strongly for boohoo.com during the period, with 46% constant currency growth, a reflection of our focus on fewer key markets. In the Rest of World, investment in our proposition continued to produce encouraging results with continued acceleration of growth in the last two months of the year," the company said.
The company had protected margins in the last two months, holding its marketing spend at about 10% of sales, and it retained its guidance that the full-year earnings before interest, tax, depreciation and amortisation margin would be about 10%. Its gross margin in the last two months of the year was 58%, down from about 61% in the year as a whole, reflecting the traditional January sale.
It will be increasing its marketing spend in the current financial year, and said its Spring #WeAreUs campaign is being "positively received".
Despite the slowdown in UK sales growth, boohoo.com said its market share has continued to grow. It achieved a 2.17% share of traffic in February 2015, a 12% improvement on the prior year, it said, citing figures from Hitwise. Overall, it said it had 3 million active customers in the last two months of the financial year, up 29% on the year.
"We continue to build our business for the long term, as we stated at our IPO last year, and our clear objective is to deliver sustainable growth. We remain absolutely focussed on execution and are increasing our marketing spend in FY16 to drive momentum in the business," Joint Chief Executives Mahmud Kamani and Carol Kane said in a statement.
Boohoo.com shares were up 7.5% at 27.15 pence early Wednesday, the highest price since its profit warning in early January. The stock is still well below the IPO price of 50 pence.
The company hasn't said when its 2015 AGM will be held, but the 2014 AGM took place in late September.
By Steve McGrath; [email protected]; @stevemcgrath1
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