The Boohoo brand sings rather than cires as it gains 260% of its year end value compared to 2015.
Retail took a hit in 2016, with American Apparel, the limited facing bankruptcy and traditional stores like Macy’s and even Neiman Marcus reporting major losses. Yet U.K. retailer Boohoo.com stock has soared this year reaching 260% of its year end value of 2015. Bloomberg markets report that “The stock’s rise is the biggest of any western European consumer-related company with a market capitalization of more than $500 million” making it 2016 best-preforming European consumer stock. The Manchester based company draws inspiration from Spanish fashion Zara’s model, putting out a range of quick designs and focusing on the ones that seem to gain momentum.
“Youngsters now will decide on Thursday what they want to wear on their Friday night out,” company Chairman Peter Williams said. “Our test-and-repeat model means we can put what they want in front of them very quickly and get it shipped out for the next day.”
Others than quick lead times and quick collections, Boohoo has other aspects that make its business model unique; it only sells online, making it easier to collect data on its customer’s presences and tendencies. Its style and prices are firmly targeted to 16- to-24 year olds. It makes over half of its products nationally in the UK, insulating it a bit from the fall of the sterling due to Brexit; complementing it with about a third of its total revenue coming from international sales. It is also diversifying its appeal with reports showing that is has recently bought Nasty Gal Inc, the Los Angeles-based retailer that specializes in fashion for young women.
All this seems to have resonated with investors, selling its stock at 60 times estimated earnings for the last 12 months, more than double of last year’s valuation. It currently has a market value of about 1.5 Billion pounds.
The good news may not last forever, the company is cautiously excited: “It’s difficult to predict what will happen next year,” the chairman said. “But it’s an exciting time.”