Boohoo online fashion retailer sees its profits double

Its sales have jumped by 51% to almost £300m, thanks to new overseas markets.

The Manchester-based firm puts its success down to “combining cutting-edge, inspirational design with an affordable price tag”.

Its booming sales growth has also been reflected in its share price, which has more than trebled in the past year.

On its stock market flotation in 2014, it was valued at £560m. It is now worth about £2bn.

The firm has gone from strength to strength in recent years, while its High Street rivals have had to deal with increasing competition from Boohoo and other online retailers.

_95782003_boohoo-image-3

“It has been a momentous year for us. The Boohoo brand has achieved outstanding revenue growth and increased profitability margins during the year,” said joint chief executives Mahmud Kamani and Carol Kane.

  • Asos sees exports boosted by weak pound
  • Biggest fall in UK retail sales in seven years
  • Retailers ‘left behind’ as consumers change habits

Its only temporary misstep was a profit warning in 2015 that unnerved investors and sent its share price down by some 40% – something the online retailer has now put behind it.

“Boohoo has seen strong sales across multiple markets, and significant volume growth in sales,” says John Stevenson, retail analyst at Peel Hunt.

According to its latest results, Boohoo’s revenue grew 33% in the UK, more than 50% in Europe, 140% in the US and 40% in the rest of the world.

The company now has 5.2 active million customers worldwide, and crucially is able to rely on social media “influencers” and video bloggers – “vloggers” – to spread the word to its 18 to 24-year-old target market.

Digital engagement

“Boohoo has been able to halve the amount it spends on marketing over the past five years, because of this shift to social media,” says Mr Stevenson.

“Relatively speaking, it has a far more engaged social media base than many other retailers – and it can use digital as a call to arms.”

It is an online marketing strategy that High Street chains are now scrambling to emulate.

The key to its success is that Boohoo is able to batch-produce items “in the low hundreds” to trial for sale on its website; something that is not a viable option for fashion chains with bricks-and-mortar stores.

article-2581015-1C49731E00000578-444_634x423_popup

This ability to “test and repeat” allows the online retailer to have a constant flow of new items on its website, with only about a third of them ever being reordered for bigger production runs if the initial sales prove successful.

Crucially, this means that online fashion retailers like Boohoo can potentially respond much more quickly to changing fashion tastes than can their High Street rivals.

With its constant product changes and low prices – dresses can start for as little as £8 – Boohoo can set its own prices. “They don’t have to follow the lead of, say Marks and Spencer,” says Peel Hunt’s John Stevenson.

Over the past 12 months, Boohoo has bolstered its international expansion plans through its £20m acquisition of struggling US fashion site Nasty Gal, which it completed in February.

The US purchase has given Boohoo access to Nasty Gal’s intellectual property and customer database that will help its US expansion plans.

Earlier this year, it also bought the smaller online fashion retailer PrettyLittleThing, which was founded by the sons of Boohoo joint chief executive, Mahmud Kamani.

Boohoo plans to expand PrettyLittleThing, which has more than a million active customers, in new markets and said it had shown strong profitable growth in the first two months since the takeover.

1F759A0D00000578-0-image-m-12_1433921532479

Source:

http://www.bbc.com/news/business-39697246

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s