Boohoo blames strong comparatives and long lead times for sales slump

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Pureplay fashion giant Boohoo has blamed strong year-on-year comparatives and extended international delivery times for a slump in sales.

Boohoo logo on a phone with Boohoo website in background showing models

Boohoo said UK revenues declined due to strong comparatives with the previous year

For the four months to December 31, 2023, Boohoo group revenue declined 11% to £637.7m. UK revenues declined by 11% to £400.8m, while international sales declined 10% year on year.

Boohoo said UK revenues declined due to strong comparatives with the previous year, while extended delivery times versus pre-pandemic affected its proposition internationally.

The retailer said its inventory continues to be tightly controlled and was down 27% year on year. It added that it had significant liquidity headroom, with more than £300m in gross cash at the end of December.

During the period, Boohoo opened a new automated warehouse in Sheffield and said it made strides towards opening a new US distribution centre, expected to open in phases during 2023 and 2024.

Boohoo said its overheads “continue to be managed tightly” and that it had reduced capacity in its UK distribution network and would be taking other actions across the group to reduce costs.

In terms of the outlook for the financial year ending February 28, 2023, Boohoo said it expected adjusted EBITDA to be in line with expectations. Sales by comparison are expected to decline by 12%.

Boohoo said it was seeing “positive signs in global supply chains” and expected some relief in the cost of freight to begin to feed through in the near term. It said it also expected inflation to begin to ease over the year.

Chief executive John Lyttle said: “Performance in the period is in line with expectations and reflects the normalisation of the channel shift online over the last 12 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.”