Online fashion giant Boohoo has slumped to an almost £91million loss after shoppers were hit by the soaring cost of living. However, shares in the company made strong gains after bosses said it will improve profitability over the new financial year and push forward with efforts to stem its declining sales.
The retailer revealed that sales slipped by 11% to £1.77billion for the year to February 28, compared with the previous year. Sales have dropped as shoppers grappled with rocketing household costs, such as higher energy and food bills, over the past year.
The group said revenues in the UK were down 9% for the year, with a weaker performance over the second half after “inflation increased and consumer demand was impacted by cost of living pressures”. Meanwhile, international revenues dropped by 13% as the group said longer delivery times also impacted trade.
Boohoo also told shareholders that sales growth was impacted by shoppers returning more goods, which jumped above pre-pandemic levels for the first time. On Tuesday Boohoo revealed that it fell to a £90.7million pre-tax loss for the year, from a profit of £7.8million. However, the group said it expects profitability to improve significant for the current year due to cost efficiencies and “cost deflation” in the supply chain.
John Lyttle, group chief executive officer, said: “Looking ahead, we are investing for the future growth of this business with automation, local fulfilment capacity in the US and building global brand awareness. We will deliver sustainable returns on these investments.
“We will continue to give our customers the latest trends, outstanding value and a great experience. Our confidence in the medium-term prospects for the group remain unchanged, and as we execute on our key priorities we see a clear path to improved profitability and getting back to double digit revenue growth.”
David Reynolds, equity analyst at Davy, said: “The emergence from the pandemic has been hard for the online retailers, Boohoo is no exception. The revenue line remains fragile, but adjusted EBITDA (earnings before interest, tax, depreciation and amortisation), inventory and cash flow have been well managed. The strategic intent is clear, execution remains challenging.”
