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Boohoo on course to unveil strong full-year sales

The online fashion retailer will unveil its full-year results on Wednesday, but how will the coronavirus pandemic impact its earnings?

Boohoo Source: Bloomberg

Boohoo will unveil its full-year results on Wednesday, with the retailer expected to reveal soaring sales in its latest earnings update, despite the economic uncertainty created by the coronavirus pandemic.

The online fashion retailer is expected to record a 42% increase in group sales to £1.22 billion for the year ending on February. The company also is forecast to record adjusted earnings (before tax and interest) of £123.6 million.

If the company is able to meet analysts expectations in its full-year results on Wednesday, it will likely help its share price climb higher, with it proving to investors that consumers thirst for fashion has not diminished in these uncertain times.

Boohoo soldiers on despite Covid-19 lockdown

A key component to Boohoo’s resilience in the face of the coronavirus outbreak is its online-only presence, with the company’s operations able to continue despite the government-imposed lockdown which has hit high street rivals hard.

As an example, high street brand Next has seen its shares fall more than 30% since the start of the year amid a significant slump in sales, with it attempting to quell concerns by saying it can withstand a £1 billion reduction in revenues in the year to January 2021 without breaching the terms of its borrowing agreements.

Boohoo shares, however, are down just 7% year-to-date, with it telling investors in January that it hopes to deliver revenue growth of between 40% - 42% for the year to February 2020.

Covid-19 expected to hurt quarterly sales

But despite all the optimism surrounding Boohoo, analysts believe that its fourth quarter (Q4) sales could take a tumble as a result of the coronavirus pandemic.

Analysts at Peel Hunt admitted to cutting ‘forecasts to factor in a 25% drop in sales this quarter’, with growth expected to be flat in Q1 of the new financial year.

However, analysts at Peel Hunt still reiterated their ‘buy’ rating for the stock despite revising their outlook for the company’s sales performance in April ahead of its full-year results.

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