U.K. Clothing Retailer Boohoo.com Surges at Start of TradingCeleste Perri
Boohoo.com Plc soared 40 percent in its first day of trading after the online clothing retailer raised 300 million pounds ($498 million) through an initial public offering.
The shares advanced 20 pence to 70 pence in London, valuing the business at 784 million pounds. The company will use 50 million pounds in proceeds to finance expansion and about 240 million pounds will go to paying down loans, it said in a statement today.
“They have hit the right button in terms of what investors are looking for -- an area where there is real, sustainable growth in a relatively difficult economy, especially in terms of discretionary purchases,” William Mack, a London-based analyst at S&P Capital IQ, said by phone.
AO World Plc, a U.K. online appliances seller, climbed on its first day of trading in London on Feb. 26 as investors rushed to increase their exposure to the growth of Web-based retailing. Ocado Group Plc, the U.K. Web-based grocer, rose more than fivefold in London last year, while online clothing retailer Asos Plc has more than doubled in each of the last two years. Researcher IMRG estimates the online retail market will expand 18 percent to 107 billion pounds this year.
“We see huge growth for online retailers in a number of sectors, but especially for online clothing retailers,” Mack said. Next Plc has seen double-digit growth in its online offering, he said.
Boohoo.com’s IPO will support “our continued ambition to provide high-quality, fast fashion at affordable prices for our fashion-conscious customers around the world,” the company’s chief executive officers said in today’s statement.
Boohoo.com, based in Manchester, England, follows Pets at Home Group Plc and Poundland Group Plc, a discount retailer, in selling shares to the public this week. Pets at Home fell on its first day of trading while Poundland surged 23 percent.
With Poundland and Pets at Home, initial stock sales in London had raised about $5 billion this year, seven times the total in the same period in 2013, as investors return to the U.K. market, according to data compiled by Bloomberg. The FTSE 350 General Retailers Index has advanced 9.5 percent this year, compared with a 1.2 percent gain for the FTSE 250 Index, as investors bet on an economic recovery in the U.K.