Boohoo.com has dived almost £91m into the red as its annual sales fell and it wrestled with higher levels of returned products as shoppers stepped out of their easy-fit jogging bottoms and hoodies and back on to high streets.
The online fast fashion business said sales fell 11% to £1.8bn in the year to 28 February, including a 9% fall in the UK. It warned that sales were likely to fall by as much as 5% in the year ahead as shoppers reined in spending amid cost of living concerns.
Performance in the US was particularly poor, with sales down 24% over the year, if currency effects were stripped out, as delivery times were held back and the cost of flying products from the UK rose.
Boohoo said it had made a pretax loss of £90.7m, compared with a profit of £92.2m a year before. The number of shoppers visiting its websites fell 10% to 18 million over the year but was still up 29% over three years as it gained customers during the Covid lockdowns.
However, Boohoo said underlying profits would rise in the year ahead as it made cost cuts and expected deflation in costs, which have risen in the past year including freight, warehousing and energy. It also incurred one-off costs in putting more automation into its Sheffield warehouse, laying off some staff and setting up a warehouse in the US.
The Boohoo chief executive, John Lyttle, said: “Over the last three years, the group has achieved significant market share gains. 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.
“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.”
Boohoo’s difficulties emerge after Asos revealed last week it had slumped £291m into the red as sales slumped in what the online fashion retailer called a “challenging trading backdrop”, with shoppers returning to physical high street stores and cutting spending on non-essentials.
The reopening of high streets and caution among consumers, as well as the rising burden of handling deliveries and returns as a result of surging energy and labour costs, are squeezing online retailers. Competition has stepped up from companies such as China’s fast fashion online specialist Shein as well as moves by Next and Marks & Spencer to sell a wider array of brands online.
Boohoo said it had swung to a loss as a result of falling sales and rising costs as shoppers returned more items than they had before the pandemic, partly as people bought more fitted dresses and occasion wear rather than the hoodies and jogging bottoms that were popular during lockdowns.
Higher costs at the series of brands Boohoo snapped up during the pandemic including Debenhams, Burton and Dorothy Perkins also contributed to losses.
