Boohoo dives into debt as losses hit £160m and sales slump
Boohoo has cut more than 1,000 jobs and dived into debt after its losses soared and sales slumped 13% amid heavy competition from the Chinese online seller Shein and the revival of the high street after the pandemic.
The online fashion specialist, which owns Debenhams, Dorothy Perkins, PrettyLittleThing and Warehouse, said it had built up net debts of £95m in the year to the end of February – down from almost £6m of net cash a year before – after losses grew 76% to £160m and sales fell to £1.8bn.
Its chief executive, John Lyttle, blamed the group’s problems on “difficult market conditions, caused by high levels of inflation and weakened consumer demand”, and said it planned to make savings of £125m in the year ahead after putting more automation into its Sheffield warehouse, closing one in Daventry, and opening a new warehouse in the US.
The latest accounts show that Boohoo, founded in Manchester in 2006, had cut over 1,000 jobs in the year as it faced an 11% drop in active website customers, each of whom spent less and visited less often.
Stephen Morana, Boohoo’s new finance director, said the group had heavily cut investment in brands including Dorothy Perkins, Oasis, Wallis and Warehouse, which are now being sold through Debenhams rather their own websites. Boohoo wrote off £22.4m relating to the value of those brands, some of which were bought for £25m out of the collapse of Philip Green’s Arcadia Group in 2021.
Morana said there was more online competition from traditional retailers and the likes of Shein.
But he added: “The business has faced into tough trading conditions and dealt with it as best it could and now hopefully there are some green shoots out there and a bit of consumer confidence is coming back.”
The group had a “robust balance sheet”, with £130m of property and a stake in Revolution Beauty, and trading had improved in the year’s second half. “We see investment to take us to growth over the next 12 months.”
The share price fell and then recovered yesterday but is less than a tenth of its value three years ago, when it was riding high on a lockdownfuelled shift to online shopping.
The company said: “While trading conditions have remained challenging due to cost inflation, uncertain consumer demand and normalisation of the channel shift online, the group has a strong business model and clear strategy which it is focused on executing to unlock market share.”