Boohoo sales for the three months to 31 December ’22 have fallen by 11 per cent to £637.7 million. The online retailer defended the results saying that the fall was due to strong comparatives in the previous year, but the business clearly has some way to go to restore its fortunes.
As previously reported the multi-brand giant has been working to rationalise its staffing and to bring acquired brands and the people working on them under a single umbrella, reined in and led by Debenhams. boohoo has also significantly reduced its inventory across the past year as part of its drive to apply strong cost control and greater efficiencies.
Commenting on Boohoo’s trading update, Julie Palmer, partner at Begbies Traynor, said: “Online retailer Boohoo had forewarned it expected sales to fall but declines of more than 10 per cent across all its regions over the key Christmas period is still a bad look.
“No matter how the performance is dressed up with talk of strong comparatives, people heading back to the high street after being forced online during the pandemic, and longer delivery times because of postal chaos, the numbers underline the tough trading conditions boohoo faces. Consumers are tightening their belts and Boohoo’s ‘fast fashion’ clothes may drop down their shopping lists as money becomes tighter – though the company’s low prices mean it could pick up business as shoppers trade down.
“On the bright side, inflation may have now peaked, meaning manufacturing costs are at least stabilising, freight prices are falling so shipping clothes from the foreign factories boohoo depends on is cheaper, while self-help measures such as cost controls and rigorous stock management are kicking in.
“Since launching in 2006, boohoo has built on its core brands, first adding PrettyLittleThing and NastyGal, before snapping up established names including Karen Millen, Coast, Warehouse, Oasis, Debenhams, Dorothy Perkins and Burtons. Although the business admits the outlook is uncertain for now, with such a widespread across the market, if it can weather the current downturn boohoo will be well placed when recovery does come.”
Boohoo’s year end is 28 February 2023 and its revenues are expected to show a 12 per cent fall rather than the 10 per cent drop it had advised in September ’22.