Marketing investment to drive growth of new brands

Boohoo increased its marketing spend by £22m in the year to 28 February, as the online fashion giant made record investments across its multi-brand platform. The investment came despite rising costs and weaker demand taking a significant toll on the group’s profits.  Boohoo reported adjusted EBITDA profit of £125m for the year, a 28% drop from the previous year and flat compared to two years ago. In particular, Boohoo said its higher marketing costs were a result of the business investing in its newly acquired brands. The company has been on something of an acquisition spree over the last few years, acquiring the MissPap, Karen Millen and Coast brands in 2019, and in June 2020 the Warehouse and Oasis brands.


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Last year saw Boohoo acquire familiar British high street names including Debenhams, Dorothy Perkins, Wallis, and Burton. According to group chief financial officer Neil Catto, there is an elevated level of marketing on these new brands of around £11m. Speaking on an investor webcast today (4 May), Catto said he is confident this investment will produce growth for the company. We’ve been building the portfolio of brands over the last couple of years, and we’ve got a big portfolio there that is producing rates of growth that you’re not seeing from the more established brands. So that’s going to start to come through in the second half of the year, he said. However, GlobalData’s senior apparel analyst Emily Salter says the success of Boohoo’s acquired brands is not a certainty.


The question of how successful its acquired brands are remains, she says, even as the business utilises its expertise with increased marketing activity for brands such as Karen Millen and Dorothy Perkins on social media and out-of-home. Boohoo also partnered with celebrities Christine Lampard to promote Wallis, and Laura Whitmore to promote Oasis, she notes. With a much broader portfolio of brands, Boohoo claimed to have a larger addressable market. The business said it had identified around 500 million potential customers across its brands, and is now looking towards longer-term competitive positioning over the next few years. The company expects to emerge from the pandemic in a far stronger position compared to two years ago.


Increased marketing spend across the group’s new and established brands is aimed at supporting this future growth, co-founder and group executive director Carol Kane said. We’re investing in the future to enable our brands to scale above and beyond what they’ve already achieved this year, she said.


The inflation impact Online retailers experienced a spike in demand during the pandemic, and so for Boohoo, a key focus for the next year is retaining the significant market share gains it made over the the last two years in the UK and US. Active customer numbers has grown by 43% across the group to 20 million since 2020, and 10% over the last 12 months. Total group sales are up 61% since 2020, while in the UK, Boohoo recorded 27% revenue growth during the last financial year. The UK is Boohoo’s biggest market, accounting for 61% of its revenue. The success in the UK represented good brand positioning and strength of brand portfolio, the group said.

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