Boohoo has lowered its full-year outlook, citing deteriorating macroeconomic and consumer conditions, after reporting a 58% decline in first-half core earnings.
The business, whose share price has fallen more than 87 percent this year and more than 10 percent today, said it now expects sales to fall during the entire 2022-23 fiscal year, with a core profitability margin between 3 and 5 percent.
It had previously projected a revenue rise in the “low single digits” and an EBITDA margin between 4% and 7%.
According to ResearchTree, the group’s stock has become the most shorted in the UK as it battles declining sales and a greenwashing investigation by the Competition and Markets Authority.
The fast-fashion retailer, which also owns the PrettyLittleThing and Karen Millen brands, posted a pre-tax loss of £15.2 million for the six months ending on 31 August, compared to a pre-tax profit of £24.6 million for the same period last year.
The loss was caused by a 10% decline in revenues to £882.4million for the quarter, compared to the same time the previous year. The company reported a significant spike in consumer returns throughout the period.
Shares of Boohoo plunged dramatically this morning and are currently down 10.10% or 3.71p to 33.02p, having dropped by more than 87% over the past year.
The company’s chief executive officer, John Lyttle, attributed the fall to a “more adverse economic background that weighed on consumer demand.”
Boohoo stated that significantly’ higher return rates, a softening in UK customer demand during the second quarter, and a 17% reduction in overseas revenues due to lengthier delivery periods contributed to the sales decline.
If present economic uncertainty and pressure on household budgets continue, the online retailer anticipates “a similar rate of revenue decreases to endure throughout the remainder of the fiscal year.”
Lyttle informed investors that he remained optimistic about the long-term direction.
‘Over the past three years, the group’s brand portfolio has earned significant increases in market share, notably in the United Kingdom, where our price, product, and offer resonate powerfully with customers,’ he said.
He continued, ‘We have a clear plan to increase future profitability and financial performance through self-help by delivering critical initiatives, which will serve us well when macroeconomic challenges subside.
We are optimistic about the long-term prognosis as we continue to provide customers with an unrivaled selection, comprehensive product lines, and competitive pricing, providing them with even more reasons to purchase with us.
Sophie Lund-Yates, an equities analyst at Hargreaves Lansdown, stated, ‘The worst of the supply chain scandal has passed for Boohoo, but it appears the company is trading one challenge for another.
The globe is no longer hurriedly ordering loungewear from the couch, and when we do place an order, it’s more likely to end up in the returns pile at Boohoo’s headquarters.
The CMA announced in July that it will investigate eco-friendly and sustainability claims made by Boohoo, Asos, and George at Asda about their fashion products, such as apparel, footwear, and accessories.
Sarah Cardell, interim chief executive of the CMA, stated in July, ‘We will investigate the veracity of green claims made by Asos, Boohoo, and George at Asda. If we determine that these corporations are making false environmental claims, we will not hesitate to take legal action, if necessary through the courts.
