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IPOs continue as Boohoo com floats

Article By: ,  Financial Analyst
March 14, 2014 4:19 PM

Boohoo.com made its market debut today (14th March), joining the growing list of companies to have listed on the LSE this year.

The UK-based online fashion retailer was certainly met with strong reception from investors.

Boohoo.com opened at 85p – that’s 70% above the company’s offer price of 50p. It’s settled around 75p, at time of writing.

The company, which (based on current price) has a market capitalisation of some £840m, raised around £300m – a proportion of which has been earmarked for expansion purposes.

On the face of it, the company’s appeal seems evident.

Boohoo.com boasts good growth, citing some 2.3 million customers (active customers are defined as those who’ve placed an order in the last twelve months) and claims around 140 thousand new customer registrations per month.

In its fiscal year, ended February 2013, the company took around £67m in revenue – up from £29m the year before; and strong growth has continued, having raked in some £92m in the ten months ended December 2013.

Boohoo.com is also profitable, with earnings before interest, tax, depreciation and amortisation coming in at around £10m in the ten months ended December 2013 and a £6.8m net profit in the period. Cash during the period was around £8m.

That said, the company’s current valuation is clearly pretty frothy, given its sales and earnings figures

Still, the online retail space is no stranger to sky-high valuations (think ASOS).

Furthermore, the inexorable rise in popularity of online shopping is well known; and if expectations for the online fashion market – in the UK alone – are anything to go by, well-positioned players within the sector look set to continue enjoying good growth.

Indeed, its performance so far indicates that Boohoo.com has been positioned well to capture the uptrend of the sector. But that’s not to say that the company’s growth story is set to continue unabated – past performance is, after all, no indication of the future.

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