|  Updated: 

Boohoo woes: Shares collapse as customers return more clothes than expected

By: and

Add as a preferred source on Google
Boohoo has been listed on the London Stock Exchange since 2014.
Boohoo has been listed on the London Stock Exchange since 2014. (Photo by Dana Pleasant/Getty Images for boohoo.com)

Boohoo faces further woes as the online retailer’s shares plunged after it admitted that consumers were returning items more than expected.

Supply chain hang-ups have also led to longer delivery times, to the detriment of the Boohoo’s international proposition, it said on Wednesday.

The beleaguered fashion firm recorded a revenue jump of 14 per cent to an eyewatering £1.98bn in the year to 28 February. However, pre-tax profit fell more than 90 per cent to to £7.8m from £124.7m a year earlier.

Despite increasing its market share, and group sale rising more than 60 per cent, investors failed to be swayed.

Shares sank 14.23 per cent to 68.62 p per share on Wednesday morning, rising slightly to 11 per cent in the afternoon.

Providing its outlook for the financial year ending 28 February 2023, the firm anticipated revenue percentage growth would be “low-single digits.”

Adjusted EBITDA margins for the year were anticipated to sit between four to seven per cent, while the group continues to be hammered by “pandemic-related factors that negatively impact costs within its supply chain and international competitive proposition.”

CEO John Lyttle said: “In the year ahead we are focussed on optimising our operations through increasing flexibility within our supply chain, landing key efficiency projects and progressing strategic initiatives such as wholesale and our US distribution centre.

“This will ensure that the group is well-positioned to rebound strongly as pandemic-related headwinds ease.”

Surging living costs loom over Boohoo’s customers, with analysts anticipating that shoppers will hold back on fast fashion purchases in a bid to control their budgets.

“Shein’s growth has compounded Boohoo’s problems, as the Chinese competitor is taking share of wallet from the British fast fashion customer,” Barnick added.

“Freight and container costs remain high and gross margins erosion is an unwelcome byproduct of this challenge.”

Boohoo’s “poor track record of production” could also play into investors and customers’ thought processes, Barnick added, describing the firm’s “fast fashion model” as “a key risk in this context.”