News

E-retailer Boohoo.com reduces its growth forecast

January 7, 2015 01:35 PM
http://www.internetretailer.com/static/uploads/thumbs/graph_coins_falling_jpg_78x78_crop_q95.jpg

Since going public in March 2014 online apparel retailer Boohoo.com had been flying high as it assured investors of rapid growth.

But while Boohoo, No. 187 in the Internet Retailer Europe 500 will finish its fiscal year with healthy top-line growth, that growth won’t be as rapid as the company predicted in October. As a result, shares of Boohoo.com dropped 40% in Wednesday trading on the AIM stock exchange in London to finish the day at $34.36 per share (22.65 pounds).

Counting results through December, Boohoo.com grew sales 28% in the first 10 months of its 2015 fiscal year to $179.4 million (117.9 million pounds) from $140.2 million (91.9 million pounds). But the increase for September to December was only for 25% to $77.3 million (50.8 million pounds) from $61.8 million (40.6 million pounds). In earlier forecasts Boohoo.com had predicted that over sales growth for the year would be at least 30%, but didn’t provide a specific range. Now it’s expecting full-year sales to grow at only around 25%.

While the company didn’t provide an actual range, Internet Retailer estimates that Boohoo.com would finish its fiscal year up 25% to $231.9 million (152.4 million pounds) from $185.6 million (121.9 million pounds).  “We announced in our interim results statement in mid-October that we had managed our marketing spend and growth in the early part of this period, whilst also delivering the successful implementation of the new warehouse management system and fully responsive web site,” Boohoo.com co-CEOs Mahmud Kamani and Carol Kane wrote in a statement. “Marketing was then increased to stimulate sales, however, the resultant growth was less than anticipated.”

Boohoo.com blames the slower-than-expected growth on a warm fall shopping season that led consumers to buy less cold-weather apparel and deep discounting from such competitors as ASOS (No. 22). “In light of the prevailing sales momentum in the business, we expect the full-year results to be below current market expectations. We now anticipate growth for the second half as a whole to be in line with the 25% growth for the four-month period to 31 December 2014,” the company says.

For the first 10 months of the current fiscal year the European market outside of the U.K. was the fastest growing for Boohoo.com with sales that reached $23 million (15.1 million pounds), up 43.8% from $16 million (10.6 million pounds). Sales for the UK increased 37.2% to $121.4 million (79.7 million pounds) from $88.5 million (58.1 million pounds) while sales to the U.S., Asia and other non-European markets grew year over year 0.6% to $35 million (23 million pounds) from $34.8 million (22.9 million pounds). "While the period proved a challenging trading environment, we have still grown the business by 25%, albeit short of our previous expectations. We are very confident that our fashion credentials, pure-play online model and the significant investment in infrastructure will continue to drive growth in the UK and internationally."

Boohoo.com did not provide a specific range for net income or operating profit for the first 10 months of the fiscal year or the full year. For the first six months ended Oct. 30, operating profit totaled $6.5 million (4.31 million pounds) compared with $5.6 million (3.71 million pounds in the prior year).

 

 

 

Back

 

Top Solution Providers

close