It’s a tough environment for UK retailers at present, as evidenced by the first major struggles of online retail stars. ASOS saw its share price devastated in mid-December after the AIM-listed online fast fashion retailer posted a severe profits warning. There have, however, also been success stories. JD Sports and Next have outperformed peers by stepping up their online offerings through investing in technology, compensating for sliding bricks-and-mortar sales.
Among pure online retailers, ASOS’s AIM rival Boohoo Group, while also seeing its share price impacted by the wider retail sell-off has continued to issue upbeat sales forecasts. Its seen a recovery in recent weeks on the back of positive reports on its Christmas season. Today, the owner of Boohoo.com, PrettyLittleThing and Nasty Gal confirmed strong festive turnover and upgraded its full year sales outlook. Sales growth forward guidance was increased to 43% to 45% from its previous level of 28% to 43%. While the UK market is still Boohoo’s bread and butter, sales from its U.S. unit soared 80% over the Christmas period.
However, that hasn’t stopped a counter-intuitive dive in its share price today, which has crashed over 7% since markets opened this morning. It’s not yet clear if the slump is because investors had priced in even better sales growth on positive Christmas comments coming out of Boohoo or if the slight downwards adjustment of ebitda margins to 9.25%-9.75% from 9%-10% has disappointed. Most retailers were forced into heavy discounting over the Christmas period in an effort to hit revenue targets, though at the expense of margins. However, within the grand scheme of things, Boohoo’s revision of margins is, well, marginal.
Boohoo Group’s executive management structure is somewhat unique in its choice of two joint chief executives, Carol Kane and Mahmud Kamani. The two are the company’s co-founders and have worked together since 1993, when Kane joined Pinstripe, a fashion supplier to high street veterans such as Topshop and H&M established by Kamani’s father. Kane’s focus is on the company’s marketing and branding while Kamani’s strengths are said to be finance, IT and operations.
Despite Boohoo’s stellar success over the 12 years since the pair founded it in 2006, there have also been recent controversies. Once widely praised for its strategy of manufacturing many of its fast fashion clothing lines in the UK in order to meet the demand for short shipping windows, some of Boohoo’s British-based suppliers have been accused of poor working conditions.