Boohoo's Stock Tumbles Despite Strong Christmas Sales Gain

(Bloomberg) -- Boohoo Group Plc fell as much as 9.8 percent even after lifting its full-year growth forecast, as the U.K. online apparel seller failed to live up to investor expectations for a blowout holiday season.

The company forecast that sales will increase by 43 percent to 45 percent, up from a previous range of 38 percent to 43 percent, after Christmas sales gains were led by popular brands PrettyLittleThing and Nasty Gal.

Boohoo’s performance contrasted with a pre-Christmas profit warning from rival Asos Plc and weak holiday sales from bricks-and-mortar chains like Debenhams Plc. Some investors wanted more, and the shares fell the most since the December update from Asos, whose stock was down 8 percent on Tuesday.

Expectations for Boohoo were high after the company said in mid-December that sales were “comfortably in line with market expectations,” prompting a rally in the shares, Barclays analysts led by Andrew Ross wrote in a note. While Boohoo is doing better than rivals, they said, its growth hasn’t accelerated from the first half despite easier comparisons.

“The guidance uplift doesn’t point to any upgrade to consensus,” the analysts said.

Boohoo’s marketing strategy harnesses Instagram, where its brand ambassadors include Kourtney Kardashian and participants on the reality TV show “Love Island.” Stars pose for pictures in the company’s leopard-print dresses and neon-colored garments, persuading young customers to click through to its websites and fill their virtual shopping baskets.

Boohoo is expanding beyond its core U.K. market and achieved 78 percent growth in the U.S. in the latest four months. In its sales update, the company pointed to “significant” global opportunities. Former Primark Stores Ltd. executive John Lyttle, who’s set to become Boohoo’s new chief executive officer in March, will oversee the next phase of expansion.

©2019 Bloomberg L.P.