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Boohoo sales to continue rapid surge as it outpaces high street rivals

By Henry Saker-Clark, PA City Reporter

Boohoo investors are expected to cheer rapid sales and higher earnings as the online fashion retailer continues to rapidly stride past its high street rivals.

All eyes will be on the retailer on Wednesday as it unveils its results for the first half of the financial year.

Expectations are already buoyant for the fast-fashion business, after it told the market earlier this month that sales growth was outstripping its own forecasts.

But questions remain over how it can keep up the blistering pace of its sales growth and what its plans are for the Karen Millen and Coast brands it snapped up in August.

Earlier in September, Boohoo told investors that it expects group sales growth to be between 33% and 38% in 2019, pushing significantly higher than previous guidance of between 25% and 30% growth.

Shares jumped as it said it would invest extra funds into the fashion brands it acquired – Karen Millen, Coast and the MissPap brand it bought in March – while holding firm on earnings targets.

City watchers will be keen to hear how this investment will be used, particularly given the current High Street focus and older clientele of its two more recent acquisitions.

It was predicted that Boohoo would announce a raft of Karen Millen store closures to focus on its key online audience, but investors will be demanding further details.

Sales for the past six months are expected to be driven by Nasty Gal, the online retailer Boohoo bought in 2017, and the core Boohoo brand is expected to have had a “resurgent” second quarter as warm weather boosted growth.

Brokerage Peel Hunt has forecast that Boohoo will grow sales by 43.4% to £566.9 million for the half year, driven by 28% growth for the Boohoo brand and 151% growth for Nasty Gal sales.

Peel Hunt analysts said: “Interestingly all brands are delivering strong momentum, with the UK in particular generating that out-performance against the backdrop of a weak high street.”

Zeus Capital agreed that the company “continues to outperform the market” and said it allayed fears about potentially cannibalising its own sales.

Analysts have said they expect full-year revenues at the Pretty Little Thing owner to hit £1.15 billion based on the current rate of growth, with earnings before tax and interest forecast at £113.6 million for the 12 months.