LONDON — Shares in the British online fashion retailer Boohoo.com ended the day having plummeted 41.9 percent to 22 pence, or 34 cents, on Wednesday, after the firm warned that full year results will “be below current market expectations.”
Boohoo on Wednesday reported a 25 percent rise in revenues to 50.8 million pounds, or $80.7 million, in the four months to Dec. 31, but said that the growth was “less than anticipated.” “We believe this was principally due to heavy promotional activity on the U.K. high street arising from the warm [fall] season,” the firm said. As a result, it expects growth in the second half as a whole to be at a rate of 25 percent, with an EBITDA margin for the full year of around 10 percent.
Sales in the U.K. rose 25 percent, while those in the rest of Europe climbed 41 percent and in the rest of the world revenues were up 24 percent. The retailer said that its gross margin for the four month period stood at 59.9 percent, up 30 basis points on the same period last year, and it had 2.9 million active customers, a rise of 31 percent over the year. In the ten months to Dec. 31, sales rose 28 percent to 118 million pounds, or $187.6 million, compared to the same period last year.
Mahmud Kamani and Carol Kane, joint chief executives of Boohoo, both acknowledged the “challenging trading environment,” but noted “we have still grown the business by 25 percent, albeit short of our previous expectations.”
In a research note Wednesday, analyst Alistair Davies at Investec said the firm had “cut its forecasts materially” for Boohoo, downgrading EBITDA to rise 24 percent in the year to February 2015. But Davies said that the broker believes the retailer’s proposition is “still valid,” pointing to the firm’s “supply chain flexibility.” “In our view, the business can continue to deliver growth in its core market and develop its international presence further,” wrote Davies, who retained a “buy” recommendation on the stock.
Other online retailers also closed the day down following Boohoo’s warning, including Asos, 4 percent to 22.27 pounds, or $35.25, and The Mysale Group, 8.8 percent to 67 pence, or $1.04.