Boohoo Group PLC (LON:BOO) shares rose on Wednesday as the online fashion retailer unveiled a sharp rise in profit and revenue for the year, driven by a strong performance at its PrettyLittleThing and Nasty Gal businesses.
Pre-tax profit gained 38% to £59.9mln and revenue increased 48% to £856.9mln in the year ended February 28. The Boohoo website delivered a 16% increase in revenue to £434.6mln while PrettyLittleThing surged 107% to revenue of £374.4mln and Nasty Gal jumped 96% to £47.9mln.
The group's adjusted underlying earnings (EBITDA) margin edged up to 9.9% from 9.8% last year on a stronger sell through and tighter stock cover.
Net cash rose to £190.7mln from £133mln but the company did not recommend a dividend as it plans to use the cash for capital expenditure to expand capacity, improve efficiency and make “suitable” acquisitions.
Boohoo has already made investments to secure warehouse capacity and to automate its Burnley facility.
Capital expenditure came to £46.9mln for the 2019 fiscal year, compared to £46.4mln last year.
'Encouraging' start to new financial year
For the current financial year, Boohoo expects capital expenditure of £50mln to £60mln. Revenue growth is expected to be 25% to 30% with an adjusted EBITDA margin of around 10%.
Boohoo said trading in the first few weeks of the new fiscal year has been “encouraging”.
Over the medium-term, the group is targeting sales growth of 25% per annum with an adjusted EBITDA margin of around 10%.
New chief executive John Lyttle, said: "I am very excited to have joined the boohoo Group at this key stage of its growth, with the group's disruptive and proven business model having delivered yet another excellent set of financial and operational results.”
Lyttle, who is the former chief operating officer of Primark, joined Boohoo in March.
By late morning trading, Boohoo shares were up 4.1% to 225.80p.
Peel Hunt keeps 'buy' stance
Peel Hunt maintained a ‘buy’ rating and target price of 300p on Boohoo shares.
“As expected, guidance for 2020 positions current consensus at the top end of the range, although the growth rate in period four and a positive commentary around current trading suggests market expectations look well supported,” Peel Hunt's analysts said in a note to clients.
“With boohoo now growing into its expanded infrastructure, we can look forward to more efficiencies and improvements to the customer proposition,” they added.
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