Boohoo shares slide after PrettyLittleThing owner admits consumer squeeze has hit profits
Online fashion retailer Boohoo expects full year revenue to be below market expectations as it continues to suffer from the squeeze on consumer spending.
The company anticipates revenue will fall by 12 per cent over the financial year ending 28 February, after it reported a fall in revenue in a trading update released this morning.
Boohoo – which owns brands such as PrettyLittleThing and Nasty Gal – was a star of the pandemic as consumers turned to its range of activewear and loungewear.
However, it has struggled to maintain the momentum post-pandemic as cost of living pressures mount.
In the four months to 31 December, Boohoo’s UK revenue fell 11 per cent while international revenue dropped 10 per cent year on year as “extended delivery times” compared to pre-pandemic impacted the company’s performance.
Chris Beauchamp, chief market analyst at IG Group said: “Boohoo continues to suffer the effect of the squeeze on consumer spending, and while it is undertaking heroic cost-saving measures and rationalising across the board, for now sales remain under pressure and are expected to keep falling.”
Shares in Boohoo were trading 7.7 per cent lower this morning.
The company noted inventory continues to be “tightly controlled”, reporting that it has fallen 27 per cent year on year.
Actions are being taken across the group to cut costs and improve efficiency, with the company reporting the successful launch of automation in its Sheffield distribution centre. It expects cost growth will moderate as the year progresses along with an improved cost inflation outlook.
CEO John Lyttle said its performance over the last four months was “in line with expectations” and reflects the “normalisation of the channel shift online over the last twelve months”.
“The group has continued to invest in key strategic priorities that will enable future growth, and the progress made gives us confidence that as macro-economic headwinds ease it will be well-positioned to rebound strongly,” he continued.