The co-founder of Boohoo.com has decided to reap the benefits of the company by selling more than £80 million in shares.
The sale of shares is all going to go to the purchasing of a new “supersite warehouse.” The profits and timing were both in prime conjunction, as the stock closed up 18% this last Thursday. The mark up could mean that those £80 million worth of shares would have an effective and positive upswing in the profits of Boohoo.com’s co-founders.
The supersite warehouse is in response to meeting retailers demand for its clothing range, which is mostly aimed at 16-30 year olds.
The company, known for its low price and style-following clothes sells dresses between £4-£50 and other articles of clothing at around the same price. Overall, the company is valued at around £2.8 billion, which is over four times as much as competition retailer Debenhams.
An independent retail analyst, Nick Bubb, was quoted as saying, “It says something about the extraordinary outlook for the business that all the shares have been snapped up at 220p, a minimal 0.3% discount to the closing price”.
It left all of the co-founders with a 39% stake in the business, which includes such brands as Nasty Gal and Pretty Little Thing. With in-demand brands like these it’s no surprise that Boohoo.com’s first quarter sales completely crushed expectations by more than doubling with the £120 million in the three months to May. The retailer’s full-year sales guidance has been raised to 60%.
But BooHoo has not always been on top. In fact, three years ago their shares were floated at 50p, and even fell to 23p in their first year. But these past 12 months have certainly told a different story. Not only have they risen—they’ve risen by 300%. Which, in the fashion business, is astronomical, not to mention practically unheard of.
Joint Chief executives Mahmud Kamani and Carol Kane were quoted, “The combination of broadening product ranges, strong brand image, competitive prices and good customer service continues to drive sales momentum, while the inclusion of our new brands is proving the potential of our multi-brand strategy in delivering strong group revenue growth.”
This warehouse expansion is also stated to include an automated distribution center, which broadens their horizons for sales capacity, predicted to provide £2 billion this year. This is already in addition to the £1 billion provided by BooHoo’s extended site in Burnley.
Over the next three years, the warehouse is expected to cost around £150 million to construct and maintain. With BooHoo’s growing profits it should not be hard to predict the ascension of this company as a whole. In a world where consumer wages are falling and the prices of products is going up, BooHoo has somehow come out unscathed. Their products continue to sell and with the acquisition of popular US brand Nasty Gal, as well as a 66% stake in UK retailer Pretty Little Thing, nothing is impossible for this company to achieve in the near future.