Delivery delays impact sales at Boohoo Group in latest quarter
Delivery delays are continuing to affect sales at Boohoo Group, with revenue declining 11% in the four months ending 31st December 2022.
UK revenues declined 11% year on year, versus a strong prior year comparative. International revenues declined 10% year on year. The company said it is working to improve cash generation through tighter inventory management, cost control and an improved working capital cycle.
Tight inventory control has helped improve speed and flexibility within its global supply base in the financial quarter, significantly reducing inventory by 27% year on year.
Gross margin for the period of 49.7% is "broadly in line with expectations", according to the business, and is expected to improve year on year in its final financial period of the year.
Progress "continues to be made" with its US distribution centre, driving a step change in its customer proposition, expected to launch with a phased approach over 2023 and early 2024.
For the year ending 28 February 2023, Boohoo Group expects adjusted EBITDA to be in line with expectations. Revenues are expected to decline approximately 12% over the financial year, with an adjusted EBITDA margin of approximately 3.5%.
With recent positive signs in global supply chains, Boohoo Group expects to see "some easing of disruption along with some relief to freight rates". Combined with the actions being undertaken on costs across the group, it expects that "overall cost growth begins to moderate as the year progresses" along with an improved cost inflation outlook.
John Lyttle, Boohoo Group CEO, commented: "Performance in the period is in line with expectations and reflects the normalisation of the channel shift online over the last twelve months, but demonstrates the significant market share gains the Group has made over the last three years. Looking ahead, whilst the demand outlook is uncertain due to macro-economic factors, cost inflation is expected to begin to moderate in the second half of the year.
"We have reduced inventory by 27% year on year and with this focus on careful inventory management, strong cost control and cash management, we will continue to drive operational and cost efficiency across the business. The Group has continued to invest in key strategic priorities that will enable future growth, and the progress made gives us confidence that as macro-economic headwinds ease it will be well-positioned to rebound strongly."
Overheads continue to be managed tightly at Boohoo Group, as the company faces a challenging economic backdrop. Measures being taken include a reduction in capacity in its UK distribution network, as well as other unspecified cost reduction action across the group.