Boohoo expected to yield two-fold growth fueled by PrettyLittleThing

Sales at fast fashion retailer Boohoo are expected to almost double this year, fuelled by renewed investment in its infrastructure and strong PrettyLittleThing's popularity.

The City expects 95 percent growth in revenues when the company reports full-year results on Wednesday, coming in at around 574.6 million pounds, reports ’CITY A.M.’ The market’s consensus estimate is for pre-tax profits to come in at circa 47 million pounds.

It’s worth recalling that Boohoo has been investing in infrastructure, with previous guidance indicating that 62 million pounds would be invested this year. Another 40 million pounds were earmarked for further development.

"Given the sales trajectory of the company we are now entering a phase of increased capital expenditure, as it continues to build out its infrastructure to help facilitate future growth," said analysts at Shore Capital.

In this regard, analysts at Investec said that the momentum behind the brand was likely to help Boohoo maintain sales growth, despite headwinds in the wider clothing market. "With customer acquisition costs falling across the industry, market commentators suspect more investment into fulfilment overseas may be necessary," analysts said.

The broker added that sister brand PrettyLittleThing is relatively immature, and could offer the company more opportunity for growth as well as operating efficiencies.

Furthermore, added other market sources, PrettyLittleThing, which 66 percent was acquired by Boohoo in 2016, has become the company’s engine of growth.

Image: Summer 2018, Boohoo Web


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