raises £50m for ‘super warehouse’ as first-quarter sales double

Mahmud Kamani

Manchester-based online fashion retailer has announced a huge increase in first-quarter sales – up 106% on last year – and raised a further £50m on the stock market, while its founders have sold £80.5m worth of shares.

Group revenue hit £120.1m for the three months to the end of May 2017 (2016: £58.2m), with £86.4m from, £30.7m from Pretty Little Thing, and £2.8m from Nasty Gal. Gross margins stood at 54.2%.

The company now expects full year revenue to February 2018 to be 60% ahead of its previous expectations.

Joint chief executives Mahmud Kamani and Carol Kane said: “While it is early in the financial year, boohoo continues to perform well and PrettyLittleThing delivered exceptionally strong revenue growth in the first quarter as it continues to expand its young female customer base. Nasty Gal has made a promising start since we acquired the brand, with revenues growing strongly month-on-month, as we increased the product range.

“Across the group, the combination of broadening product ranges, strong brand image, competitive prices and good customer service continues to drive sales momentum, whilst the inclusion of our new brands is proving the potential of our multi-brand strategy in delivering strong Group revenue growth.”

The construction of a second warehouse extension at the group’s Burnley site is expected to be complete in early 2018, adding 900,000 sq ft of storage to the existing 996,000 sq ft and providing sufficient capacity for a £1bn net sales operation.

However boohoo said that its pace of growth is such that it is planning to construct a new automated super-site of over 600,000 sq ft, which will provide boohoo with over £2bn of net sales capacity.

The group expects the land acquisition of the new site and construction to cost around £150m over the next three years, doubling the group’s capital expenditure for this financial year to £63m, with ongoing capital expenditure linked directly to the super-site forecast to be £75m next year and £49m the year after.

It is funding the investment through a £50m fundraise, placing of 22.7 million shares at 220p a share.

Founder Mahmud Kamani and family members Rabia Kamani, and Nurez Kamani also sold 36.6 million shares for around £80.5m,giving the family members a remaining 38.57% of the total share capital.

A team at Manchester-based Zeus Capital comprising directors Nick Cowles, Andrew Jones and Jamie Peel, acted as nominated adviser, joint broker and joint bookrunner on the transaction.

Cowles said: “This transaction is a significant milestone for boohoo, with the new funds generated to support its ongoing expansion plans. Following a remarkable start to the year, with sales more than doubling, the investment in a state of the art warehouse will enable the business to increase its sales capacity and continue to satisfy the growing demand for its products.

“The transaction also marks the first realisation of shares for the Kamani family since boohoo’s 2014 flotation. From its £560m valuation on admission, the management team have overseen a remarkable period of growth, with the company now valued at nearly £2.5bn.”

Roger Hart and Jamie Partridge of Addleshaw Goddard advised Zeus and Jefferies International.

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