Fashion Retailer Boohoo.com Announces £560m Flotation

Boohoo.com is the latest online retailer to list on the London Stock Exchange. Will it be the next ASOS plc (LON:ASC)?

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 7 March, 2014 1:10 pm GMT

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The UK’s second biggest online fashion retailer boohoo is expected to be valued at £560m when it lists on the AIM next week.

The Manchester firm was founded in 2006 by entrepreneur Mahmud Kamani and designer Carol Kane. Prior to the float the Kamani family have held an 82% stake in the business, which will be reduced to 42% after the float.

Boohoo will begin trading next Friday (14 March) with shares priced at 50p. The company boasts of 2.3 million customers and in the 10 months ended December 2013 saw sales increase by 70% to £92m. Over a third of sales are made outside the UK.

The management team is experienced, having previously supplied high street fashion chains Primark and New Look.

Boohoo is the latest among a host of retailers that have either floated or confirmed their intentions to list on the London stock market.

These companies include McColl’s Retail Group, which so far has fallen short of the value the newsagent chain had hoped for, and the electricals firm AO World, which has attracted controversy over its sky high valuation relative to its bottom line.

Of course, while investors will be hoping that the firm can match the success of larger rival ASOS — whose shares began trading at 315p in 2009 and are now worth 6,696p — such stratospheric gains don’t come along very often.

With a host of new retail shares to choose between you’re best bet isn’t to follow the bandwagon just for the sake of getting in right away. Rather, study the business carefully, so that above all else you know what you’re buying.