Online fashion retailer Boohoo has shrugged off comparisons with Asos by posting with a bumper set of maiden results that showed profits had more than tripled.
"We are just innocent bystanders," said Boohoo co-founder Mahmud Kamani after last week's massive profit warning by Asos hit confidence in internet retailers with 9% wiped off the Boohoo share price on the day. "We don't compare ourselves with anybody. The share price moves with market sentiment."
The Manchester-based company has been on a rollercoaster ride since it joined London's junior market in March. After listing at 50p the shares soared to 85p, but have since fallen back.
Last Thursday more than a third was wiped of Asos's market value after it warned the strong pound and heavy discounting in markets such as Australia would hit profits this year. Both companies sell clothing, but Boohoo sells only its own-brand fashions and has a smaller selection, with just 9,000 styles to choose from. "Nothing has changed in the last 10 weeks," said Kamani.
The fashion retailer, which targets the 16-35 age group, was set up in 2006 by Kamani and his business partner Carol Kane. The co-chief executives previously supplied high street rivals such as Primark and New Look. Boohoo.com, which makes extensive use of social media, has been described as an online Primark.
"After all the trauma over the recent Asos profits warning, Boohoo seems to have shown it has a different business model," said independent retail analyst Nick Bubb. "Boohoo's own-label range gives it far more control than Asos apparently has over pricing and margins, and Boohoo has not needed to emulate Asos's discounting approach in Australia."
Boohoo said sales increased 63% to £110m in the year to 28 February, with pre-tax profits surging from just over £3m to nearly £11m. In the UK, its largest market, sales rose 60%. The new financial year had also started strongly with sales up 24% in the three months to 31 May. The firm has used the £50m raised at IPO to invest in its IT systems and warehouse, which has been expanded to support a turnover of £350m.
With profits coming in slightly ahead of expectations, the shares closed up nearly 10% at 50.5p.
"We view Boohoo as a brand and design-led online player with an under-rated competitive advantage in sourcing and supply chain," said Investec analyst Kate Calvert.
