boohoo group – Half year results show falling sales amid cost-of-living crisis
After accounting for returns by customers, revenue for the online fast fashion retailer fell by 10% to £882m. That’s still 56% up on the equivalent pre-pandemic period in the first half of 2019.
Underlying operating profit was down 85% on the first half of 2021 to £9.6m, and 81% down on the six months to August 2019. This was impacted by freight and logistics inflation, weaker than anticipated consumer demand and high cost inflation from the macro-economic environment, as well as an increase in brand investment.
Boohoo expects a similar rate of revenue declines to persist over the remainder of the financial year if these conditions continue. Full year underlying EBITDA (cash profit) margins are likely to be between 3% and 5%, compared to the previously guided range of 4% and 7%.
Derren Nathan, Head of Research at Hargreaves Lansdown
”Investors may well be crying into their cornflakes after a read of boohoo’s interims today. Profits are being squeezed both at the top line and through higher costs and this looks set to continue.
The group reports significant progress towards long-term growth ambitions but we must remember that the long term is a series of short terms, and it remains to be seen how long weak demand, inflationary pressures, and supply-chain bottle necks will continue for.
boohoo isn’t just sticking its head in the sand though, and we hope that recently launched automation on the Sheffield distributions centre and a new distribution centre expected to open in the States in the first half of next year will help margins to recover and improve boohoo’s fulfilment capabilities. But it’s going to be tough going amid the deepening cost-of-living squeeze.’’
