Boohoo hit by increased returns and cost-of-living crisis
Boohoo has posted a drop in half year sales and profit after trading was impacted by the ongoing cost-of-living crisis.
In the six months to 31 August, the online fashion retailer saw its adjusted pre-tax profit slump by 90% to £6.2 million following a 10% decline in revenue to £882.4 million.
John Lyttle, Boohoo group chief executive, said: “Performance in the first half was impacted by a more challenging economic backdrop weighing on consumer demand.”
The retailer said returns rates rose significantly in the half year and were ahead of pre-pandemic levels.
In addition, Boohoo’s UK revenues fell by 4% in the period as sales softened in its second quarter due to consumer demand being impacted by cost-of-living pressures.
Meanwhile international revenues declined by 17% as the retailer was hindered by continued extended delivery times.
Boohoo said it expects a similar rate of group revenue declines to persist over the remainder of the financial year if the current difficult trading conditions continue.
In addition, it is predicting that adjusted EBITDA margins are likely to be between 3% and 5% compared to its previously guided range of 4% and 7%.
Last weekend it was reported that Boohoo had been cancelling and postponing orders from suppliers due to the cost-of-living crisis impacting sales.
Looking ahead, Lyttle said today: “We have a clear plan in place to improve future profitability and financial performance through self-help via the delivery of key projects, which will stand us in good stead as macro-economic headwinds ease.
“We remain confident in the long-term outlook, as we continue to offer customers unrivalled choice, inclusive ranges and great value pricing, giving them even more reasons to shop with us.”
