Boohoo Group Plc Announced Q1 FY20 Trading Update

Company overview

AIM-listed Boohoo Plc is engaged in the online apparel retailing business. The group sells its own branded clothes together with its low-cost saving PrettyLittle Thing and Nasty Gal. The company has a global presence, with the UK, Europe, Australia and the US being the primary markets. Its products are targeted at the age group of 16-30 years and have a customer base of more than 5 million. Products are distributed globally from the UK, where they are designed and sourced. Through the development of the boohoo MAN brand, its offering has now extended in menswear and continues to expand with other range extensions such as maternity and boohoo KIDS. The company’s operations are differentiated in three operating segments: boohoo, PrettyLittleThing (PLT) and Nasty Gal. Its shares got admitted to AIM (Alternative Investment Market), a sub-market of the London Stock Exchange as on March 14, 2014. The group is headquartered in Manchester, the UK.

Trading Updates

The online apparel retailer reported its trading update for the three months ended on May 31, 2019. Group’s total operating revenue during the period under review surged to £254.3 mn from £183.6 mn recorded in the previous corresponding period. Recorded growth in the group’s revenue stood at 39% on YoY basis.

Geographical contribution

The UK was the major contributor in the top-line of the group's revenue, its contribution stood at £140.6 mn and recorded a surge of 27% from £110.7 mn recorded in the three months ended to May 31, 2018. United States contribution stood at £51.3 mn against £31.4 mn reported in the year-ago period. Sales in the United States was up by 64% on YoY basis. The group bagged £38.2 mn from the rest of Europe (ROE) and reported an increase of 72% on YoY basis and remaining £24.2 mn came from the rest of the world (ROW) and registered an increase of 26% on YoY basis.

Key Brands Contribution

During the period under review, revenue from their leading boohoo brand surged by 27% to £123.5 mn, and gross margin from the segment stood at 54.1%. PrettylittleThing revenue surged to £112.1 mn and was up by 42% on a YoY basis, and gross margin stood at 55.9%, and revenue from Nasty Gal recorded a surge of 153% and stood at £18.2 mn, and gross margin stood 56.1% respectively.

Outlook

The online apparel retailer reported a decent performance in the first quarter of FY20. For the full year, the management expects a growth of 25% to 30% in the top-line with an adjusted EBITDA margin of around 10% for the FY20.

John Lyttle, CEO at Boohoo, statement

“Boohoo has recorded a strong start for the year FY20 and will continue to increase our market share in the United Kingdom across all our brands. We are pleased that Boohoo topped the UK Hitwise ranking for the first time in May 2019. This indicates that our multi-brand strategy is getting customers' traction. The group is well placed to invest in our scalable multi-brand strategy to gain market share and capitalise on the opportunities available globally."

Stock Performance

At the time of writing (as on June 12, 2019, at 12:02 PM GMT), shares of the Boohoo Plc were quoting at GBX 231.2 and added 1.0 points or 0.45% against the previous day closing. The outstanding market capitalisation of the company stood at £2.67 bn and is listed on the Alternative Investment Market (AIM) of the London Stock Exchange. Its shares are the constituents of FTSE AIM 100, FTSE AIM All-Share-Retail and FTSE AIM All-Share.

Share Price Chart – 1 yearÂ

Daily price chart (as on June 12, 2019), before the market close. (Source: Thomson Reuters)

52-wks High/Low

In the past 52-wks, shares of the BOO have registered a high of GBX 249.50 (as on April 30, 2019) and a low of GBX 146.39 (as on December 17, 2018) and at the current trading level, shares were trading approximately 7% below the 52w high price level and 57.9% above the 52w low price level. This indicates that the stock is hovering near its 52w high price level and it has the potential to register a new high in the near term.

Volume Summary

In today’s market session (at the time of writing), volume in the stocks traded on the London Stock Exchange stood at 8,737,281. The 5-day average daily volume traded on the stock exchange stood at 4,161,086.20, which was 22% above the 30-day average daily volume of 5,316,254.60 traded on the London Stock Exchange.

Price Performance (%)

In the past one-year, shares have delivered a price return of approximately 4.54%, but on a year-to-date basis, the stock was up by approximately 42.48% and in the last three months, the stock was up by approximately 32% respectively.

In the past year, the stock ended 135 times in green, 117 times in red and ended flat 1 time against their respective previous day closing price.

Simple Moving Average (SMA) standpoint.

From the SMA standpoint, shares of the BOO were trading considerably above the 200-day and 60-day simple moving average prices and marginally below the 30-day SMA price level. However, it has time and again proven right that, if a stock is trading above its 200-day SMA price level, it reflects the stock is in an uptrend and potential to move up further, although exceptions are always there.

Relative Strength Index (RSI)

The 30-day and 14-day RSI of the stock stood at 54.8 and 50.61, respectively, which indicates that the stock is trading within the normal levels. However, it is not indicating any specific trend movement in the price.

52wk PE (x) Range

At the current market price, Last twelve months (LTM) PE of the stock stood at 71.5x. However, in the past 52-wks, the stock has touched a high PE of 82.9x and a low PE of 51.8x.

Volatility (Beta)

The stock is carrying a beta of 1.45x, which indicates that the stock is substantially highly volatile against the benchmark index FTSE 100 Index. So, one should pay close attention at this measure because a 1x change in the benchmark index could have 1.45x repercussion in the Boohoo stock, in both sides (up/down).

Conclusion

The online retailer reported strong numbers for the first quarter of FY20. The company expect consolidated revenue growth to be in the range of 25 per cent to 30 per cent. The Adjusted EBITDA margin is estimated to be around 10 per cent for FY20. Rest of the guidance parameters remains unchanged as stated in the trading update.

Given the above factors, the overall trend in the stock looks decent. Also, there are technical measures that are creating the supporting ground for the stock to move up further from the current trading levels.