boohoo raises full-year revenue forecast, plans new UK warehouse

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boohoo Group PLC (LON:BOO) has raised full-year revenue forecasts after a strong performance in the past four months, while it is also planning to open a new warehouse in the UK.

The fast-fashion retailer expects revenue for the financial year to February 28 to jump 36-38%, ahead of the previous guidance of 28-32%.

READ: Will the fast fashion business model ever become outdated?

The AIM-listed firm continues to expect to deliver an adjusted underlying (EBITDA) margin for the year at around 10% despite COVID-19 related headwinds and higher marketing costs.

The PrettyLittleThing and Oasis owner said it is close to finalising an extension of UK warehousing capacity, with a new site to open in April that will support the creation of up to 1,000 jobs in the first 12 months of operation.

In the four months to December 31, group revenue surged 40% to £60mln, with US and UK up 51% and 40% respectively, ‘rest of Europe’ and ‘rest of the world’ up 32% and 24% respectively.

Gross margin was 53%, down 0.5% compared to last year, while net cash at the end of the period was £386mln.

Governance scandal update

Following last summer’s scandal which uncovered poor working practices at a supplier factory in Leicester, boohoo set out to improve its governance and has been appointing teams to oversee and strengthen its ethical practices.

Following the appointment of Brian Leveson to oversee the ‘Agenda for Change’ programme, the online retailer published the former judge’s first report on Thursday.

It has also removed 64 suppliers from its UK roster, with further investigations ongoing, and is identifying new alternative ethical suppliers globally.

The firm committed to publish UK tier one and tier two supplier list by end of March, and global supplier list by the end of September, which will both be updated every six months.

“The share price resurgence suggests that investors have put the supply chain issues behind them, and growth suggests no impact from any consumer activism,” analysts at Liberum commented.

“While this suggests a BUY, we remain on the side of caution given the scale of the ESG challenges facing the group, the possibility of follow-up investigations and potential financial impact from an ethical supply chain though the company guidance dismisses this. If Boohoo can adequately deal with its ESG issues, there remains significant upside to the share price.”

Shares dipped 1% to 366.86 p on Thursday morning.

–Adds analyst comment, shares–

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