Boohoo sales fall to continue as cost-of-living drags on consumer demand
Boohoo Group has revealed a 13% fall in profits for the six months to 31 August 2022 and expects them to keep falling as cost-of-living pressures weigh on customer demand.
The online fashion giant also told shareholders that profit margins are expected to be lower than previously predicted as a result.
The firm, which owns Boohoo, Debenhams, PrettyLittleThing and Karen Millen, swung to a pre-tax loss of £15.2 million for the six month period, compared with a £24.6 million profit over the same period last year.
The loss was driven by a 10% slump in revenues to £882.4 million for the half-year compared with a year earlier.
John Lyttle, Group CEO, blamed the decline on a “more challenging economic backdrop weighing on consumer demand”.
Boohoo said the sales decline was partly caused by “significantly” higher return rates, a “softening” in UK customer demand during the second quarter and a 17% slump in international revenues, where it has been impacted by longer delivery times.
It told shareholders it expects “a similar rate of revenue declines to persist over the remainder of the financial year” if current economic uncertainty and pressure on household budgets continue.
The group also warned that earnings margins are expected to be between 3% and 5% for the year due to cost inflation, downgrading previous guidance of between 4% and 7%.
Over the past half-year, the company recorded margins of around 4% after feeling pressure from “freight and logistics inflation”.
John Lyttle, CEO of Boohoo Group, commented: "Performance in the first half was impacted by a more challenging economic backdrop weighing on consumer demand. Over the last three years the group has seen significant gains in market share achieved across our brand portfolio, particularly in the UK where our price, product and proposition resonate strongly with customers.
"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."
Boohoo Group has been reportedly cancelling and postponing orders from suppliers amid slowing sales for fast fashion and rising costs. A supplier in Leicester told The Sunday Times: "Boohoo has cancelled a load of orders. We are just here to do the fast stuff and when they don’t need it, they just stop it in its tracks."