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(Alliance News) - boohoo Group PLC on Wednesday reported its first half profit doubled and expects annual revenue to climb by almost a third as the fast fashion firm promised "substantive" changes following an independent review into its supply chain.
Revenue in the six months to August 31 surged 45% year-on-year to GBP816.5 million from GBP564.9 million. Pretax profit jumped 51% to GBP68.1 million from GBP45.2 million a year earlier.
The period coincided with the Covid-19 lockdown in the UK which forced high street retailers to shutter stores, boosting demand for online fashion sellers such as boohoo.
"The group has made a good start to the second half of the year, with momentum continuing into September," boohoo said.
Helping the interim revenue rise was 55% growth in its international arm, including an 83% surge in the US. Boohoo's international operations now account for 47% of its revenue, up from 44% a year ago. UK revenue meanwhile, climbed 37% year-on-year in the first half.
For the year ending February, boohoo now expects revenue growth between 28% and 31%, up from its previous forecast of 25% growth.
"Capital expenditure is expected to be higher than previously anticipated, in the region of GBP80 million to GBP100 million, reflecting the step-up of investments into automation at our Sheffield facility, further expansion of existing automation at the Burnley facility and significant IT projects to support the growth of the business and improve efficiency," boohoo added.
Back on Friday last week, boohoo had laid out a series of changes it plans to make after an independent review found "significant and clearly unacceptable issues" in its supply chain. The review was launched by boohoo in July following claims it sold clothes made in factories where staff were paid less than the minimum wage.
The Sunday Times newspaper had reported allegations that workers in Leicester's Jaswal Fashions Ltd factory making clothes for Boohoo brand Nasty Gal were being paid as little as GBP3.50 an hour and operating without social distancing measures in place.
Boohoo denied Jaswal Fashions was ever a supplier, however.
"Jaswal Fashions Ltd, contrary to the media report, is not and has never been a supplier for the group, and does not operate in the unit stated," Boohoo said in July.
However on Friday, the firm said a review identified "many failings" in the Leicester supply chain and recommended improvements to boohoo's corporate governance, compliance and monitoring processes. Alison Levitt, who was appointed to run the probe, was satisfied the company did not deliberately allow poor conditions and low pay to exist within its supply chain, however.
Chief Executive Officer John Lyttle said: "We have established a programme to implement the recommendations of the report to make substantive, long-lasting and meaningful change that all stakeholders in the boohoo group will benefit from."
He added: "There are many challenges still ahead due to uncertainties posed by the Covid-19 pandemic, but despite these challenges there are many positives from our activities in the first half. The resilience of our business model and the commitment and flexibility of our colleagues and partners has enabled us to continue to operate our business successfully."
Shares in the company were 3.3% lower at 377.11 pence each in London on Wednesday morning.
By Eric Cunha; ericcunha@alliancenews.com
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