Fast fashion giant Boohoo’s said its revenues fell by 17 per cent in the six months to August to £729m, and warned of further sales falls in the year ahead.
The online shopping brand, which has been undergoing a turnaround plan, said that in the year ending February revenues could slip by between 12 to 17 per cent, as the company’s continues to be hindered by a tough buyer market.
Boohoo, which is popular among young adults, said that gross profit declined 16 per cent to £389m and adjusted EBITDA sank 12 per cent to £31.3m.
The Debenhams owner is one of many online shopping brands to be hit hard by the changing habits of shoppers post-pandemic.
Its chief, John Lytlle, has been rolling out a ‘back to growth’ strategy and said it is aware of £125m of cost savings across its goods and supply chain.
The company’s gross margin also grew by 90bps to 53.4 per cent as it was bolstered by tighter inventory management.
Boohoo has also been investing in its growth, launching a US distribution centre to help further expand its next day and express delivery services.
The average selling prices on garments is now also down year-on-year, compared to the UK clothing market which has seen price inflation of eight per cent.
It comes as Mike Ashley-owned retail powerhouse Frasers Group also built a 9.1 per cent stake in the business over the last few months.
At the time, the powerhouse said Boohoo was an appealing brand due to its “laser focus on young female consumers”.
Lytlle said: “We have seen significant improvements in sourcing lead times and invested in pricing to reinforce our value credentials.
“We have identified more than £125m of annualised cost savings that support our investment programme.”
He added: “Our confidence in the medium-term prospects for the group remains unchanged as we execute on our key priorities where we see a clear path to improved profitability and getting back to growth.”
Richard Hunter, head of markets at interactive investor, said “Boohoo has become more associated with red flags rather than glad rags, but this latest update at least offers some glimmers of hope.
“The group has recognised that it needs to trim some fat, and has identified £125m of annual cost savings over the next two years. “
He added: “At the same time, with the supply chain easing and with lower input prices beginning to filter through, boohoo has been able to pass on some lower prices to customers. Indeed, the group estimate that its average selling prices have fallen over the last year, as compared to price inflation of 8% for the wider UK clothing market.”