RE: Boohoo - Financial Times Article22 Jun 2020 10:35
Boohoo's Profit margins are also strong. Peter Williams, a former Boohoo chairman who previously served as a non-executive of Asos, said this was partly because it was an own-label business. “Asos sells other people’s products as well as its own. That dilutes the margin percentage,” he said.
Zalando and increasingly Next are also platform businesses, selling brands from Topshop to Ted Baker alongside their own. Boohoo has preferred to buy in brands to extend its appeal.
Boohoo acquired Karen Millen, Coast and MissPap last year, and more recently Oasis and Warehouse. It has made no secret of its willingness to acquire more, and has £350m of cash to do so.
Unlike Asos, which started several years earlier, Boohoo did not build its own information technology. “They were early adopters of things like Salesforce and Amazon Web Services,” said one former employee. “They took the view that if you could buy it off the shelf at reasonable cost, then do that.”
This reduced capital spending and allowed managers to concentrate on product and marketing — an area where it routinely spends 10 per cent of revenue.
“They understand and embrace the social media that their customers use,” said Catherine Shuttleworth, who runs digital marketing agency Savvy.
“Their staff are all young?.?.?.?it’s not run by a load of old men who don’t understand how digital marketing works,” she added. “And they’re not afraid to make mistakes. If something doesn’t work, they just move on and try something else.”
One well-known fashion executive said the background of Boohoo co-founder Mahmud Kamani, who spent years in the clothing supply chain, was also a key factor.
“He’s a product man with a product background,” said the executive, who has known Mahmud Kamani as both a supplier and a rival. “All that technology and marketing, you can hire that in, but being a merchant is the piece you just can’t buy.”
Staff at the group’s Manchester headquarters are fiercely loyal and have shared in its success.
Last August, Boohoo gave more than 2,000 employees 884 shares each. “I know people there who have paid off their mortgages,” said one of the former employees.
Boohoo is already contemplating opening its first warehouse outside the UK.