Boohoo co-founder sells £80m in shares as he reveals 'supersite' plan

Boohoo co-founder sells £80m in shares as he reveals 'supersite' plan

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The co-founder of Boohoo.com has cashed in on the fast-growing popularity of the online fashion group by selling more than £80m in shares.

Mahmud Kamani and his siblings Rabia Kamani and Nurez Kamani sold a total of 36.6m shares. The Manchester-based retailer also raised £50m through the placing of 22.7m new shares priced at 220p.

The shares hit a record high – closing up 18% at 260p on Thursday – after Boohoo said the money raised from the sale of new shares would be used to pay for a “supersite” warehouse, as the retailer attempts to meet rising demand for its clothing ranges, aimed at 16- to 30-year-olds.

The company, which sells dresses priced from £4 to £50 and jeans ranging from £6 to £35, is valued at about £2.8bn – four times as much as Debenhams.

Nick Bubb, an independent retail analyst, said: “It says something about the extraordinary outlook for the business that all the shares have been snapped up at 220p, a minimal 0.3% discount to the closing price [on Wednesday].”

It left the Kamani family, together with co-founder Carol Kane, with a 39% stake in the business, which also includes the brands Pretty Little Thing and Nasty Gal.

George Mensah, an analyst at Shore Capital, said: “We have no concerns about the possibility of the most senior member of management selling down equity, we believe this to be opportunistic … and we believe both chief executives to be committed to the long-term future of the business.”

The retailer exceeded expectations for first-quarter sales, which more than doubled to £120m in the three months to 31 May.

Boohoo also raised its guidance for full-year sales growth to 60%, from an earlier forecast of 50%. The shares were floated at 50p three years ago and fell to 23p in the first year, but over the past 12 months they have risen more than 300%.

Carol Kane, joint chief executive and founder of Boohoo.com.



Carol Kane, joint chief executive and founder of Boohoo. Photograph: Christopher Thomond for the Guardian

Mahmud Kamani and Kane, joint chief executives, said the business had performed well across all brands and locations in the first quarter.

“The combination of broadening product ranges, strong brand image, competitive prices and good customer service continues to drive sales momentum, while the inclusion of our new brands is proving the potential of our multi-brand strategy in delivering strong group revenue growth,” they said.

Warehouse expansion plans include an automated distribution centre to provide £2bn in annual sales capacity, on top of the £1bn provided by its extended site in Burnley.

The cost of the land and construction of the warehouse is expected to cost about £150m over the next three years. A spokesperson for the company said Boohoo had yet to decide on a location for the 600,000 sq ft facility.

The upbeat outlook from Boohoo was in sharp contrast to the fortunes of its rival Topshop, part of Sir Philip Green’s retail empire, where UK sales fell for the first time in more than a decade. It also came despite a challenging backdrop for consumers, as prices rose faster than wages.

Boohoo was founded in Manchester in 2006 targeting young, cost-conscious customers. The average item of clothing on the website is £13. The company bought a 66% stake in Pretty Little Thing, which aims to “make every girl feel like a celebrity”, in January. It bought US-based Nasty Gal, which targets 18- to 27-year-olds, a month later.

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