Devendra Kumar
Boohoo, the online fashion giant, has reported a pre-tax loss of almost £91 million, a stark contrast to its £7.8 million profit in the previous year. The company cited the soaring cost of living as the main reason for its decline in sales, which slipped by 11 per cent to £1.77 billion for the year to February 28th. The group’s UK revenues dropped by 9 per cent, with a weakened performance in the second half due to increasing inflation and consumer demand being impacted by cost-of-living pressures. International revenues also took a dip, declining by 13 per cent due to longer delivery times.
Boohoo’s sales growth was further impacted by climbing return rates, which surpassed pre-pandemic levels for the first time. The company attributed this to changes in consumer behavior and the shift towards online shopping. Despite these challenges, Boohoo remains confident in its medium-term prospects and is focused on executing its key priorities to improve profitability.
Boohoo’s CEO, John Lyttle, emphasized the company’s commitment to investing in its future growth, including automation, local fulfillment capacity in the US, and global brand awareness. He also highlighted the company’s focus on delivering sustainable returns on these investments, as well as providing customers with the latest trends, outstanding value, and a great experience. Lyttle’s confidence in the company’s medium-term prospects remains unchanged, with a clear path to improved profitability and double-digit revenue growth.
However, not all analysts are convinced by Boohoo’s optimistic outlook. David Reynolds, equity analyst at Davy, noted that the revenue line remains fragile, but acknowledged that the company has managed its adjusted EBITDA, inventory, and cash flow well. He also praised the strategic intent behind Boohoo’s plans, but cautioned that execution remains challenging.
Despite these challenges, Boohoo shares made strong gains after the company’s results were announced, indicating that investors are optimistic about its future prospects. With its continued focus on improving profitability and executing its strategic plans, Boohoo aims to recover from its current slump and regain its position as a leading online fashion retailer.