Pure-play online fashion retailer Boohoo.com (BOO:AIM) is raising smiles once again, the shares bouncing 6.6% higher to 126p as sales guidance is upgraded once more.

Manchester-headquartered Boohoo has also activated its option to acquire high-growth fashion brand PrettyLittleThing in a complementary deal that will turbo-charge its growth potential in global fast-fashion.

Click here to read today's update, in which Boohoo upgrades full year revenue growth guidance yet again, this time up from a 30-35% range to a stellar 38%-42% growth rate.

Boohoo flags strong trading across the Black Friday weekend, a scenario Shares outlined in our Christmas Crackers retail feature here, and says peak season trading continues to be encouraging.

Reflecting further efficiency gains on marketing spend, the structurally-advantaged apparel purveyor also revises up EBITDA margin expectations from around 11% to between 11%-12%.

PRETTY LITTLE DEAL

But the headline-hogging news is the much-anticipated acquisition of PrettyLittleThing, the affordable female fashion retailer run by Boohoo joint CEO Mahmud Kamani's son Umar (pictured below). Boohoo already had the option to acquire the business for £5m and has taken a 66% stake for £3.3m in cash.

Boohoo has the option to mop up the remaining 34% of PrettyLittleThing from February 2022 at a market value to be 'determined by a Big Four accounting firm'. The outstanding 34% will incentivise Umar Kamani and his senior team to hit demanding earnings targets for PrettyLittleThing, which is on a veritable growth tear.

Founded as an accessories only site in 2012, it quickly morphed into a fast fashion retailer 'offering killer affordable style to female fashion breakers and makers' and as such, operates in a similar market to Boohoo.

PrettyLittleThing's sales shot up over 400% to £17m in the year to February 2016, revenue rocketed north from £6.4m to £19m in the half year to August and the site is expected to break even at the EBITDA level on sales up more than 150% in the year to February 2017.

NATURAL FIT

Boohoo chairman Peter Williams says 'PrettyLittleThing was always going to be 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.'

'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.'

Shore Capital reiterates its 'buy' rating on Boohoo, retail sage George Mensah commenting: 'We would also say given boohoo’s strong financial position, more than £50m of cash on the balance sheet, further M&A activity cannot be ruled out. We do note though that in the near-term the company will embark on an extensive capital expenditure programme, building a second warehouse facility to support future growth.'

Mensah adds that 'today’s statement gives us confidence to reiterate our bullish stance around the group. We feel the business has delivering revenue and profit growth simultaneously and has acquired a fast growing business at what we would view is a significant discount to its intrinsic value.'

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