Boohoo.com fashions a stock market flotation

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The Independent Online

The online fashion retailer Boohoo is the latest retailer to bag itself a stock market flotation this year, as it goes head to head with larger rival Asos.com on AIM.

Manchester-based Boohoo has raised £300m, giving it a market capitalisation of £560m. It will begin trading next Friday (14 March) at 50p a share – valuing it at a fraction of established rival Asos with its £5.75bn market capitalisation. Boohoo will trade at around a 50 per cent discount to Asos shares. Set up by clothing supply chain specialists Mahmud Kamani and business partner Carol Kane in 2006, Boohoo will trade at a margin of around 14 per cent of earnings (EBITDA).

Mr Kamani and his family will have reduced their stake from 82 per cent to 44 per cent making a tidy sum in the process when it floats. Ms Kane will retain her original 9.8 per cent holding after the float.

It will be beaten to market by Indian online retailer Koovs, set up by former Asos chairman Lord Alli, which lists on Monday.

Convenience store retailer McColl's, online electrical AO.com and Russian supermarket chain Lenta have listed, while Pets At Home and discount retailer Poundland are also due to float in London imminently; department store group House of Fraser and B&M are in the planning stages.

Boohoo, advised by Zeus Capital, hired former Asos director Peter Williams as chairman and former Shop Direct boss Mark Newton-Jones as non-executive director ahead of the float.

Like Asos, Boohoo targets 16 to 24-year-old shoppers and operates in the UK, Ireland and Australia, while selling into more than 100 countries. It also operates a local French-language site.

But unlike Asos, which sells brands and its own line of clothing, Boohoo just sells its own brand which it said allowed it to achieve "gross margins of over 60 per cent". It designs, sources, markets and sells what it describes as the "latest on-trend fashions" with 2.3 million active customers and, it claimed, 140,000 new customers signing up each month.

Boohoo reported that for the 10 months to the end of 2013, sales increased by 70 per cent to £91.9m.

Joint chief executive Ms Kane said: "Boohoo is a lifestyle driven, online destination... We are confident that our competitive position and growing customer base means that we are well placed to capitalise on the fast-growing online fashion retail market."

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