Boohoo boss insists outlook is good in face of £159m loss
BOOHOO chief executive John Lyttle is confident that the online fashion giant is on the road back to profitability, after its annual losses ballooned 76% to £159.9million.
Aside from the steep fall in its pre-tax profits, its revenues for the 12 months to the end of February dropped 17% to £1.5billion and its finance costs nearly doubled to £22.5million. Additionally, its £5.9million cash surplus turned into net debt of £95million.
Boohoo blamed weak consumer demand, high inflation, restructuring and redundancy costs, the closure and write off of its Daventry warehouse, switching IT systems and the need to invest in its new US fulfilment centre for it sinking deeper into the red.
However, Lyttle said that the automation of its massive Sheffield fulfilment centre, ongoing efficiency programmes, the completion of its US warehouse, the performance of Debenhams online department store, the completion of major investment projects and improving conditions will help it back into profit.
“These factors, combined with improving market conditions, give us strong confidence in our medium-term outlook,” Lyttle said. “Boohoo is now well positioned to return to growth.” Boohoo’s results were at the bottom end of City expectations and analysts and observers said that the pressure is on Lyttle to demonstrate that his turnaround efforts are bearing fruit.
Guy Lawson-Johns, Hargreaves Lansdown equity analyst, said that the results were a “painful read” for Boohoo’s investors. He added: “With customer KPIs [key performance indicators] continuing to trend in the wrong direction, it doesn’t look like a miraculous recovery is around the corner.” Global Data associate apparel analyst Alice Price said that one of the big problems facing Boohoo as it fights to turn itself around is the strength of fast growing Chinese rival Shein. “Once a star performer, the group [Boohoo] has recently been struggling to compete with Shein’s burgeoning influence, as the ultra-fast fashion giant continues to steal share, thanks to its unbeatable prices and rapid delivery of the latest trends,” she said.