Thursday 14 January 2021 10:54 am

Boohoo enjoys strong growth but admits Brexit will drive up costs

Brexit is likely to drive up prices at Boohoo, with additional costs largely relating to distribution and administration to blame. 

In a market update this morning the online retailer said it had implemented a system that was designed to minimise the impact of Brexit on its European customers, and it would try to mitigate extra costs where possible. 

Read more: Boohoo appoints new auditor following factory working conditions scandal

Shares in the online retail giant were down 3.4 per cent this morning, on the news.

Boohoo enjoyed revenue growth of 40 per cent in the final months of 2020 and expects to report around 37 per cent revenue growth for the financial year.

Read more: Boohoo exits 64 Leicester factories over code of conduct breaches following supplier scandal

The online retailer said it had cash of nearly £387m to support future growth, and that it was close to finalising an extension of its UK warehousing capacity, with a new site to open in April 2021.

Poor working conditions

Boohoo came under fire last year after several failings were found in the online fashion retailer’s supply chain in England, following allegations about working conditions and low pay. As a result Boohoo cut ties with 64 suppliers.

Read more: Boohoo takes £775m hit as auditor stands down

The group then set about righting wrongs, appointing retired judge Brian Leveson to independently check its drive to improve its supply chain and business practices.

Leveson’s first report was published today and found Boohoo had taken “long lasting and meaningful change to the group’s supply chain and business practices.”

Boohoo group executive chairman Mahmud Kamani said: “I’m immensely proud of the speed with which our team has worked to effect change during such a challenging period for the group, and it’s encouraging to see our progress acknowledged in the report. 

Read more: Boohoo factory saga ‘one of the worst ESG scandals’ in UK history, Leicester MP says

“We’ve added further independent experience to the board and its committees in the period, and I was delighted to welcome Shaun McCabe to the board in November. I’d like to take this opportunity to thank our team for their exceptional hard work over the last few months, and to reinforce our commitment to being a leader for positive change in UK textiles manufacturing.”

Read more: Boohoo and Nike grilled over supply chain links to slave labour in China