ONLINE BRAND INVESTS IN DISTRIBUTION NETWORK TO INCREASE GLOBAL SALES
BOOHOO confirmed its position as one of the few winners in Britain’s brutal retail market on Tuesday (12) as its online fashion and low prices attracted young customers at home, in Europe and the US.
After years of mounting strain, Britain’s clothing sector has been upended in 2018 with traditional giants such as Marks & Spencer and House of Fraser forced to shut stores as consumers shop online for cheaper goods. Several major names have gone out of business as retailers selling everything from clothes to electronics and discounted goods have closed, with the loss of thousands of jobs.
Founded in Manchester in 2006, Boohoo has expanded rapidly, purchasing the PrettyLittleThing and Nasty Gal brands in recent years.
“Our multi-brand strategy is delivering above-market rates of growth globally,” Boohoo’s joint CEOs Mahmud Kamani and Carol Kane said in a statement.
Boohoo, whose model echoes that of online peer ASOS which has also grown rapidly around the world, reported first-quarter revenue up 53 per cent to £183.60 million as its 16 to 30-year old customers snapped up its own-brand clothing, shoes and accessories.
In contrast Ted Baker, a 30-year-old traditional fashion retailer that has outperformed many rivals with strong international growth, posted a 4.2 per cent rise in revenue for the 19 weeks to last Saturday (9) and noted the “challenging” external trading conditions across many of its markets.
Struggling high street group New Look also released full-year results on Tuesday, with an underlying operating loss of £74m showing why it is cutting costs and closing stores.
Shares in both Boohoo and Ted Baker drifted lower, giving the online retailer a market value of £2.4 billion and Ted Baker a value of £1bn.
The one threat to the pure online players has been the need to step up spending on technology and logistics to meet demand and stay ahead of the online fashion pack. Boohoo is making record levels of investment to build a distribution network able to support £3bn of net sales globally. It reported full-year revenue of £580m in April.
Last year, Mahmud Kamani and siblings Rabia and Nurez sold some 36 million shares, and a further 22.7 million shares at 220p, netting around £80m.
The company reiterated its full-year outlook of revenue growth of 35 to 40 per cent and adjusted core earning margins between nine to 10 per cent.
The Kamani family wealth was valued at £875m in this year’s Asian Rich List, published by Eastern Eye.
Kamani told the Asian Rich List in a previous interview that a huge part of the Boohoo success was down to his father. (With Reuters).
