However, the fast fashion business warned that its EBITDA for the full financial year – while positive – is likely to be below expectations due to the increased distribution costs associated with trading during the coronavirus pandemic.
Missguided spoke to Drapers ahead of the release of its 2019/2020 annual results on Companies House, which show its turnaround continued last year.
Turnover rose 8% to £202m in the year to 29 March 2020, while its EBITDA including exceptional items remained in the black at £2.1m, down from £3.5m in 2018/19. However, its operating loss widened from £3.6m to £5.2m.
Missguided’s core ecommerce channel benefitted from increased marketing investment and activity, which boosted its brand awareness in the UK and abroad. Sales outside the UK grew by 15% to £94.2m and it now trades in more than 180 countries.
The etailer also enjoyed “strong” revenue growth across its smaller wholesale and franchise channels, while revenue from its retail channel continued to decline as it exited its own store operations. The remaining UK Missguided store at Bluewater shopping centre in Kent closed in March.
The Covid-19 pandemic began to take hold towards the end of Missguided’s 2019/2020 year. Ecommerce sales dropped significantly in the two weeks prior to the first UK-wide lockdown. However, this was “almost entirely offset” by a reduction in returns, partly because sales shifted to looser fitting product lines.
Demand quickly returned to normal levels and has been on an upwards trajectory since. Missguided said its short supply chain allowed it to flex its ranges in response to the increased appetite for casual clothing and activewear.
Between April and November, sales were up 45%. Missguided has acquired 1.9 million new active customers since the start of its 2020/21 financial year.
The UK has grown strongly – up by double digits – as has the US and key European markets including France and Ireland. More than half of Missguided’s sales now come from overseas, and its turnover in the US is expected to outstrip the still-growing UK market by 2022.
Awareness in the US has been boosted by its popular Playboy X Missguided collaboration, which first launched in 2018, and a new tie-up with singer Sean “P Diddy” Combs’ brand Sean John.
However, its bottom line for the 2020/21 year will be hit by the increased costs of doing business in a Covid world.
To enable social distancing while meeting the spike in demand, Missguided moved its wholesale distribution and returns out of its main UK warehouse, which has caused some loss of efficiency. It is now operating three separate warehouses instead of one.
It has also felt the impact of higher air and sea freight costs, which it said have increased by up to 10 times since the start of the pandemic. Missguided’s main manufacturing bases outside of the UK are China and Pakistan.
Meanwhile, customer delivery costs have risen during the pandemic.
Nitin Passi, founder and CEO of Missguided, told Drapers it had been a year of “ups and downs, and constant challenges”.
“Overall, the business has had a phenomenal year from a top line growth perspective, adding around £100m to our annual turnover,” he added. “It’s nice to get some aggressive growth back under our belts.
“We decided last year that this year we would start pushing our international investment and we’ve seen good growth in the US and some of our key European territories.
“However, distribution is what’s really hurt us. So while we’ll deliver very strong top line growth, our EBITDA forecasts aren’t going to be where we want them to be.
“Air and sea freight rates are astronomical, up to 10 times higher than what they usually are. And we’ve been hurt on courier charges to our customers – the surcharges are through the roof. For the last quarter of this year we might divert some investment away from the US and into the UK, as it costs less to ship to our domestic customers.
“We have to be as agile as possible – we’ve reforecasted and rebudgeted every single month of this year. But we’re feeling pretty confident as a business about 2021.”
