Stock Market Star Boohoo Is Expanding With Acquisitions of PrettyLittleThing & Nasty Gal

The UK based online fashion retailer Boohoo had a spectacular year at the stock market with the company’s valuation increasing by 265% in 2016.

Boohoo

Boohoo had revenues of £185 million in 2015/16 (+40%). For the current fiscal year, Boohoo is estimating growth of 38% to 42%. (see also this company update from September 2016 (PDF))

Boohoo16

In December, Boohoo announced the acquistion of PrettyLittleThing for £3.3 million(PDF):

PLT revenue grew by over 400% to £17.0m in the financial year ended 29 February 2016 (FY 15: £3.1m), and the Company delivered revenue of £19.0m in the six months to 31 August 2016 (H1 16: £6.4m)

PLT is expected to achieve revenue growth in excess of 150% in the financial year ending 28 February 2017 (“FY 17”), while being broadly breakeven at EBITDA level. In FY 18, the Group plans to review and invest in PLT’s operations, including its warehousing, to ensure the Company is well positioned for the future. Accordingly, PLT’s revenue is expected to grow at a similar rate to boohoo’s in FY 18

For $20 million, Boohoo is also about to acquire the insolvent Nasty Gal(PDF):

Founded by Sophia Amoruso in 2006, Nasty Gal is a bold and distinctive brand for fashion-forward, free- thinking young women which the Board believes would complement boohoo’s own inclusive and inspirational brand. Leveraging the Group’s existing product development, supply and distribution expertise, the Board believes the proposed transaction has the potential to accelerate the Group’s international growth, particularly in the US, building on boohoo’s existing customer reach and product range across the globe.

Nasty Gal delivered net revenue of US$77.1 million in the year ended 1 February 2016. This includes revenue from vintage clothing and third party brands, which are excluded from the proposed transaction. The Company made a net loss after tax of US$21.0 million after taking into consideration operating costs. The proposed transaction relates to the acquisition of intellectual property assets only and excludes all operating costs.

Quite obviously, Nasty Gal represents a comparatively inexpensive market entry into the US on the branding side of things. It is not clear though how much brand power Boohoo will get without the founder. Nasty Gal founder Sophia Amoruso won’t be around at Boohoo:

“It’s more tricky to separate Nasty Gal from its founder than in a normal case,” says Brown. “She has morphed into other areas so to expect a direct transfer of all that credibility seems unlikely.”

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