RE: Scary at first sight8 May 2024 15:02
New questions emerged over fast fashion firm Boohoo recovery plan this morning, as losses ballooned to £160 million and sales slid by double digits across all regions.
The online retailer, which also owns Debenhams and the PrettyLittleThing brand, reported a £160 million loss for the year to 29 February, up 70% on last year.
Revenue was down 17% to £1.46 billion, which the business said came "as group performance continued to be impacted by a difficult macroeconomic environment".
Weak consumer demand has only added to the problems facing Boohoo.
Like recent fashion casualty Ted Baker and on-the-brink Superdry, Boohoo’s clothes have been falling out of style. At the same time, it faces stiff competition from Chinese retailers Shein and Temu, which sell their clothes at prices that homegrown retailers have struggled to compete with.
The business has been pursuing higher margins, but the sales slowdown suggests that it’s struggling to do so without losing customers.
Yanmei Tang, analyst at Third Bridge, said:
“Investors want Boohoo to make profit, but raising prices due to inflation while customers face financial strain puts them in a tough spot.”
Julie Palmer, Partner at Begbies Traynor, warned:
“In today’s competitive landscape for fashion, that’s not going to be easy, especially as cheaper competitors continue to take market share and there is a growing shift away from fast fashion amongst younger generations who increasingly prefer to buy pre-loved garments.”
The slide in sales came across all regions, including an 18% decline in the US, which Boohoo had hoped to be a key part of its turnaround strategy. Boohoo said long delivery times have “undoubtedly impacted demand” in the US, but the company hopes that this will improve as it opens a new warehouse in in Elizabethtown, Pennsylvania.
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