Shares in online retailer Boohoo rose 7 percent in early trading on Tuesday, after agreeing to buy a majority stake in rival PrettyLittleThing.
Boohoo will buy 66 percent of PrettyLittleThing’s share capital for £3.3 million, with an option to acquire the full company for £5 million. The company also updated its profit guidance after “strong” trading across the Black Friday weekend, now expecting to deliver revenue growth of between 38 percent and 42 percent in 2017, against previous guidance of between 30 percent and 35 percent.
The deal with PrettyLittleThing is expected to be consolidated from 3rd January 2017. Peter Williams, Chairman of the boohoo Group, commented:
“PrettyLittleThing was always going to be a natural fit with boohoo. Umar and his team are to be congratulated for creating a fantastic brand, which complements boohoo’s own inclusive and innovative brand, and we are delighted to add this fast growing, international business to the Group. We believe this is an excellent opportunity to extend the Group’s overall customer appeal through two distinct, complementary brands while further enhancing the Group’s strong growth trajectory. We look forward to building on PrettyLittleThing’s success and we welcome Umar and his team to the Group.”
Umar Kamani, CEO of PrettyLittleThing, added:
“PrettyLittleThing has been a great success story over the last couple of years. Our youthful management team enables us to engage directly with our target market, pushing the boundaries of innovation in the celebrity led world of fast fashion. As part of the boohoo Group, we will continue to build on our strong brand positioning and we are excited by the prospect of continuing to anticipate and set trends”.
Pretty Little Thing saw revenue growth of 400 percent to £17.0 million in the financial year ended 29 February 2016, and is expected to achieve revenue growth in excess of 150 percent in the financial year ending 28 February 2017.
Shares in Boohoo (LON:BOO) are currently up 7.19 percent to 126.75 (0918GMT).