Shares jumped more than 9 per cent to 241p today after funding secured March - May sales across the group were up 106 per cent to £120.1million Shares in online fashion upstart Boohoo jumped more than 9 per cent today as investors saw an opportunity for rapid growth in the firm's £50million share placement to fund a new mega-warehouse. Boohoo, which recently bought US retailer Nasty Gal and Pretty Little Thing, said it needs more warehouse capacity and is seeking £50million from investors to put towards the £150million required to build the new facility. A company's share price usually falls when there's a placement as it increases the total number of shares, plus it can be an indication that a company is struggling financially. However, if the request for funds is to rapidly grow the business, this can push the share price higher. Expansion: Boohoo is seeking to raise £50m from investors to fund the development of a blockbuster warehouse The group said the new facility, scheduled to be completed by 2020, could generate £2billion worth of sales – in addition to the £1billion net sales provided at its Burnley base, which is also to be extended. As a result, it issued an equity placing to raise £50million and said it expects capital expenditure to be £63million this year compared to previous guidance of £34million. Shares in Boohoo rose 9 per cent, or 20p, to 241p in morning trading. It's a Pretty Big Thing... Online fashion firm Boohoo on target to hit turnover of £1bn by 2020 It came as the fashion firm, which has been growing heavily in the UK and abroad, boasted soaring sales and profits. Sales across the group as a whole were up 106 per cent to £120.1million in the three months to May 31, compared to £58.2million in the same period the year before. Boohoo sales increased 48 per cent to £86.4million while sales in Pretty Little Thing increased by 305 per cent to £30.7million. Nasty Gal, which Boohoo acquired for £16million earlier this year, made £2.9million. It now expects revenue growth for the full year to be around 60 per cent, ahead of previous guidance of 50 per cent. Joint chief executives Mahmud Kamani and Carol Kane said: 'Our performance in the first quarter has been very encouraging across all brands and geographic regions. 'While it is early in the financial year, Boohoo continues to perform well and Pretty Little Thing delivered exceptionally strong revenue growth in the first quarter as it continues to expand its young female customer base. 'Nasty Gal has made a promising start since we acquired the brand, with revenues growing strongly month-on-month, as we increased the product range.' Last year, pre-tax profits rose 97 per cent to £30.9million, while revenue also soared 51 per cent to £294.6million.
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Understanding Simple Methods
Bearing out this demand for newness, Rent the Runway says fully 95% of those who rent apparel are trying a new brand for the first time. Second, young consumers tend to have more limited budgets and, according to Chic by Choice, only one-third of millennials are willing to purchase apparel at full price. The rental model is a near-perfect answer to consumer demand for premium fashions at affordable prices. Rental services are not the only option for frugal shoppers looking for premium labels. Fashion resale marketplaces have similarly attracted millions of members looking for wardrobe options that combine desirable or high-end brands with affordability. Peer-to-peer marketplaces such as eBay have long been a part of the e-commerce ecosystem, but more specialized sites that allow users to buy and sell clothing, footwear and accessories have flourished recently. Major US apparel resale firms include The RealReal and Tradesy, which each say they have five million members. The two companies have raised almost $200 million in combined funding to date. Major European firms include Vestiaire Collective, which claims 6 million customers and has raised $130 million in funding. Another major resale player, ThredUP, has estimated that the US apparel resale market was worth $14 billion in 2015 and that it will grow by 79%, to $25 billion, in 2025.
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