Boohoo ups guidance and acquires PrettyLittleThing
Young fashion etailer Boohoo had upgraded the guidance on its revenue growth for this year and announced the acquisition of fellow fast-fashion brand PrettyLittleThing.
The Manchester-based business now says it is on target to deliver revenue growth of between 38% and 42% in FY (financial year) 17, against previous guidance of between 30% and 35%. It "continues to benefit from improved operating leverage" in the business, and has therefore also upgraded its EBITDA margin guidance to between 11% and 12% in FY 17, against previous guidance of around 11%.
Boohoo will also be boosted by the acquisition of 66% of the PrettyLittleThing brand (21 Three Clothing Company Ltd) for a cash consideration of £3.3m.
The remaining shares will be used to incentivise PrettyLittleThing CEO Umar Kamani and his management team to continue to deliver high growth. The incentive is dependent on the team remaining with the business until February 2022 at which point Boohoo has the option to acquire the shares at market value.
Since 2014 PrettyYoungThing has shown exceptional growth. Its revenue grew by over 400% to £17m in the financial year ended 29 February 2016 (FY 15: £3.1m), and it delivered revenue of £19m in the six months to 31 August 2016 (H1 16: £6.4m). It is expected to achieve revenue growth in excess of 150% in the financial year ending 28 February 2017, while being "broadly breakeven at EBITDA level".
In the following financial year (FY 18) Boohoo plans to review and invest in PrettyLittleThing's operations, including its warehousing, to support future growth.
Boohoo chairman Peter Williams said PrettyLittleThing was always "a natural fit" with Boohoo. "Umar and his team are to be congratulated for creating a fantastic brand, which complements Boohoo's own inclusive and innovative brand, and we are delighted to add this fast growing, international business to the group," Williams said.
"We believe this is an excellent opportunity to extend the group's overall customer appeal through two distinct, complementary brands while further enhancing the group's strong growth trajectory. We look forward to building on PrettyLittleThing's success and we welcome Umar and his team to the Group," Williams added.
PrettyLittleThing was founded in 2012 as an accessories only website. It introduced clothing in 2013 and now offers head to toe trend-driven looks at affordable prices.
"PrettyLittleThing has been a great success story over the last couple of years. Our youthful management team enables us to engage directly with our target market, pushing the boundaries of innovation in the celebrity led world of fast fashion. As part of the Boohoo Group, we will continue to build on our strong brand positioning and we are excited by the prospect of continuing to anticipate and set trends," said Kamani.
