Will it be tears or cheers for Boohoo.com when it reports its first quarter figures next Tuesday?
Walking the tightrope of investors’ expectations has become increasingly difficult for the online retailer. It struggled at the end of 2017 following September’s half year results, and got off to a poor start to 2018 following a poorly received post-Christmas update in January. By early April the stock was tickling £1.40, its worst price in 14 months.
(Source: Spreadex, 06/06/2018)
However, last April’s full year results sparked a recovery, the stock jumping 15.6% in a single session before continuing that rally throughout May and early June. Boohoo.com PLC now sits at a current trading price, and 5 month peak, of £2.13.
That annual report saw Boohoo post the kind of double digit growth it’s become known for. Sales almost doubled, rising 97% to £579.8 million, driven by PrettyLittleThing’s own 228% surge in revenue to £181.3 million. As for region-by-region, UK sales rose 95%, with a 121% jump in the US, a 73% increase in the Rest of Europe and a 64% upturn in the Rest of the World. This helped pre-tax profit rocket 40% to £43.3 million, the highlight of an all-round stellar statement.
Importantly, the strength of those numbers allowed investors to temporarily ignore the 180 points drop in gross margin to 52.8%, an issue that had been one of the main reasons for the stock’s September to April decline.
In terms of its first quarter update on Tuesday, the company once again faces the tough task of meeting the sky-high standards it has set for itself. Investors are going to want to see the continuation of the company’s absurdly strong sales growth, and will be looking out for any comments on margins.
Boohoo.com (LON:BOOH) has a consensus rating of ‘Buy’ alongside an average target price of £2.29.
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