British Electricity Supplier Boohoo: Is Sales Important Or Profit Margins More Important?

Is sales important or profit margin more important?

Britain's hottest public market

Online retailers

.com PLC (BOO.L) has different opinions.

According to the world clothing and shoe net, in the Wednesday issue of the China Daily, Boohoo.com PLC doubled its medium-term revenue and increased its annual sales forecast from 60% to 80%, but this did not prevent the company's rocket share price from falling.

Under the expected impact of the lowered EBIDA profit margin, Boohoo.com PLC shares fell 15.75% to 218 pence on Wednesday, but the stock still recorded a 112% increase over the past year, much better than the increase of about 23% of big brother ASOS PLC (ASC.L).

On the basis of a 240 base point drop in the EBITDA profit margin from 13% to 10.4% in the medium term, Boohoo.com PLC expects the EBITDA profit margin to fall to 10% from the previous 10%, which is why the company's share price was punished on Wednesday.

In the first half of August 31st, the company recorded a pre tax profit of 20 million 300 thousand, an increase of 41% from 14 million 400 thousand in the same period last year, and adjusted EBITDA 2780 million, up 68% from 16 million 500 thousand a year earlier.

In the first half of fiscal year 2018, Boohoo.com PLC revenue surged 106%, from 127 million 300 thousand to 262 million 900 thousand pounds.

Boohoo.com PLC co chief executive officer Mahmud Kamani and Carol Kane said that the acquisition business PrettyLittleThing recorded strong growth, while the bankruptcy American electricity supplier Nasty Gal Gal, which was taken in March, has been growing steadily on almost zero basis every month. The three businesses have synergy effect, greatly improving the growth potential of the group.

They also said that the group will continue to invest in IT, warehousing and other infrastructure construction in order to provide preparations for the next stage of development.

Analysts at Peel Hunt, an investment bank, said that any setback in Boohoo.com PLC PLC is a buying opportunity in the open market. The bank expects that the revenue of British electricity providers will reach 1 billion in 2-3 years, and will be "buy" rating for the British fashion business.

Liberum analyst Adam Tomlinson said that while the UK electricity providers raised their revenue expectations, they did not increase their profit expectations at the same time. Although the upward trend was obvious, the management of the company also increased investment in products, pricing and marketing.

Previously, Boohoo.com PLC invested 50 million pounds to invest in warehousing capacity, with a view to providing assistance to the group's target of 2 billion pounds.

Boohoo.com PLC is expanding rapidly in the young market. Not only does it depend on the company's attractive pricing, but also its application to social media and marketing methods for young consumers is another door to open sales growth.

The mid term revenue of the new PrettyLittleThing acquisition business has surged 289% to 72 million 700 thousand pounds, and gross margin 54.8% is also better than the gross profit margin of the group's total 53.3%.

The group also raised its expected revenue growth to 150%, double the previous 75% forecast; boohoo.com's revenue increased 43% to 181 million 800 thousand pounds, gross margin 52.3%, and fell 300 basis points, which also affected the overall mid term gross margin of the group's decline by 200 basis points, but the retail gross margin of the business was 54.4%, down by 260 basis points.

Nasty Gal recorded a median income of 8 million 400 thousand pounds.

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