Boohoo boss pledges to ‘rebound’ as profits slide and returns rates spike

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Boohoo has recorded a slide in preliminary profits exacerbated by slowing international growth, but boss John Lyttle says the etailer is “well-positioned to rebound strongly”.

Boohoo posted a 28% fall in adjusted EBITDA year on year to £125m in the year to February 28, flat on a two-year basis, which the retailer attributed to factors including lower than anticipated growth and “higher marketing costs as we invest in newly acquired brands.”

The retailer also said increased air freight and shipping costs “collectively impacted EBITDA by £60m”.

Boohoo’s group revenue increased 14% year on year to £2bn and was up 27% across the UK. But the online fashion retailer said its growth was negatively impacted by “significantly” increased returns rates “ahead of both expectations and pre-pandemic levels”, as well as dampened demand in key international markets due to local lockdowns and extended delivery times.

Read more: How can fashion retailers soothe their rising returns headache?

As a result, international sales declined 3% year on year.

Boohoo said that “returns rates are expected to remain around current levels” in its current financial year and that increased freight costs would continue in the first half of the year.

As a result it anticipated revenue growth would be “low-single digits” and that adjusted EBITDA margins for the year ahead would be “between 4% and 7%”.

The online fashion retailer registered a 10% increase in active customer numbers year on year to 20 million, and opened two new distribution centres in Daventry and Wellingborough during the financial year.

The retailer is also on track to launch an automated warehouse in Sheffield in September and a US distribution centre next year.

Boohoo chief executive John Lyttle said: “Our focus over the past two years has been on investing to build a strong platform, with the right infrastructure, supported by increased capacity to better serve our customers.

“In the year ahead we are focused on optimising our operations through increasing flexibility within our supply chain, landing key efficiency projects and progressing strategic initiatives such as wholesale and our US distribution centre. This will ensure that the group is well positioned to rebound strongly as pandemic-related headwinds ease.”