Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Boohoo delivered some positive news to investors’ doorsteps this morning as the fast-fashion group continues its turnaround.
“With just a month left to go in its financial year, the group revealed it’s trading above expectations.
“Full-year underlying cash profit is now expected to be £50million, ahead of previous guidance of £45m.
“Progress is being driven by continued momentum in its Debenhams brand, but importantly, all of its brands are trading profitably.
“That includes the once-struggling PLT (PrettyLittleThing), which the group had been looking to offload.
“But there’s been a step-change in performance since shifting PLT to a marketplace model.
“This model involves allowing third-party brands to sell their goods on its online platform, with PLT taking a cut of any third-party sales made, and banking just that cut as revenue.
“The marketplace model brings a host of benefits, allowing sales to scale quickly as more sellers are brought into the fold.
“The third-party sellers also own the stock and are responsible for picking, packing and shipping orders, removing a host of costs and inventory risk from boohoo’s operations.
“Given the pace and scale of the turnaround at PLT, which has driven a sharp improvement in profitability, the group’s changed its mind and decided to hold onto the asset for now.
“Despite the progress at group level, boohoo isn’t out the woods yet.
“Retail is a fiercely competitive space, and there are plenty of key customer metrics that need to start trending in the right direction again before investors can get too excited.”
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