Shares in pure-play online fashion retailer Boohoo (BOO:AIM) bounced 3.3% higher to 237.7p after confirming media speculation it has made an offer to acquire the online business of British brands Karen Millen and Coast from the administrators.
The bid demonstrates the increasing clout and ambition of Boohoo, flourishing at a time when online fast-fashion peer ASOS (ASC:AIM) is struggling. It also confirms the UK high street shakeout continues at pace, with Mike Ashley’s Sports Direct International (SPD) having snapped up clothing brand Jack Wills for £12.75m late yesterday afternoon.
AMBITIOUS BOOHOO CONTINUES TO BUILD
Boohoo believes the online business of the Karen Millen and Coast brands would represent ‘highly complementary additions’ to its ‘scalable multi-brand platform’, while extending the ambitious AIM-listed group’s offer as part of its vision to ‘lead the fashion e-commerce market globally’.
However, management stresses these talks ‘may or may not result in agreement of a transaction’.
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Significantly, today’s statement makes no mention of the 200-plus shops and concessions operated by Coast and Karen Millen, seemingly confirming a Sky News report that said the deal would put hundreds of jobs in the two brands’ stores in jeopardy.
Broker Shore Capital commented: ‘In our view, Boohoo was always looking to potentially add to its stable of brands. Comparisons could be made with Inditex, which operates eight brands including fast-fashion favourite Zara. Boohoo currently has four brands trading today (Boohoo, Pretty Little Thing, Nasty Gal and Miss Pap). We will watch developments with interest.’
A GROWTH STORY TURNING HEADS
Founded in Manchester in 2006 by Mahmud Kamani and Carol Kane, Boohoo sells clothes, shoes and accessories to young, price-conscious shoppers. In early 2017, it added to the eponymous Boohoo brand with the acquisition of the ‘vibrant fashion brand’ PrettyLittleThing and ‘free-thinking brand’ Nasty Gal, with the Miss Pap brand also added to the fold in March this year.
Boohoo has morphed from a single brand business into a major multi-brand online retailer with around 13m active customer accounts across all its brands globally as at 28 February 2019.
Back in April, Boohoo unfurled superb results for the year to 28 February with sales up 48% to £857m and EBITDA (earnings before interest, tax, depreciation and amortisation) up 49% to £76.3m.
In a subsequent first quarter trading update, CEO John Lyttle reported 39% group level top line growth to £254.3m and reiterated full year guidance for sales growth of 25%-to-30% with an adjusted EBITDA margin of ‘around 10%’.
‘We have ambitious plans for the group, and continue to invest to ensure that our scalable multi-brand platform is well-positioned to disrupt, gain market share and capitalise on the global opportunity in front of us’, he enthused.
