Boohoo sales continue to decline as cost of living impacts consumer demand

Boohoo has revealed sales have fallen by a tenth over the past six months and expects them to fall further as pressure on the cost of living weighs on consumer demand.

The online fashion giant also informed shareholders that profit margins are expected to be lower than previously predicted as a result.

The company, which also owns the PrettyLittleThing and Karen Millen brands, posted a pre-tax loss of £15.2m in the six months ended August 31, compared with a profit of £24.6m in the same period last year.

The loss was caused by a 10% slump in revenue to £882.4m for the half year compared to a year earlier.

John Lyttle, the group’s Offaly-born chief executive, blamed the decline on a “more challenging economic backdrop, which is weighing on consumer demand”.

Boohoo said the drop in sales was partly due to “significantly” higher returns rates, a “weakening” of UK customer demand in the second quarter and a 17% slump in international revenue, where it was impacted by longer delivery times.

It told shareholders it expects “a similar rate of sales declines to continue for the remainder of the fiscal year” if current economic uncertainty and pressures on household budgets continue.

The group also warned that cost inflation is expected to drive profit margins between 3% and 5% for the year, downgrading the earlier guidance of 4% to 7%.

In the past six months, the company has reported margins of around 4 percent after feeling the pressure of “freight and logistics inflation.”

Mr Lyttle told investors he remains positive about the longer-term development.

“Over the past three years, the group has made significant market share gains across our portfolio of brands, particularly in the UK where our price, product and offering have been well received by customers,” he said.

“We have a clear plan to improve future profitability and financial performance through self-help through the delivery of key projects, which will stand us in good stead when macroeconomic headwinds ease.

“We remain confident about the long-term prospects as we continue to offer our customers unrivaled choice, comprehensive ranges and competitive prices, giving them even more reasons to shop with us.”

https://www.independent.ie/business/world/boohoo-sales-fall-to-continue-as-cost-of-living-drags-on-customer-demand-42023198.html Boohoo sales continue to decline as cost of living impacts consumer demand

Fry Electronics Team

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