Fashion retailer’s losses widen as sales fall by a fifth
‘DIFFICULT MARKET CONDITIONS’ TO BLAME FOR SLUMP IN REVENUES
FASHION firm Boohoo has insisted it is on the path to recovery after revealing a steep jump in annual losses and sales down by nearly a fifth.
The clothing chain, which recently put its Thurmaston Lane factory up for sale, reported pre-tax losses of £159.9 million for the year to February 29, against losses of £90.7 million the previous year.
Revenues tumbled 17 per cent to £1.5 billion, which the firm blamed on its “increased focus on profitability and difficult market conditions”.
The group said it saw improved trading of its core brands – Boohoo, BoohooMAN, PLT, Karen Millen and Debenhams – with declines in sales by gross merchandise value (GMV) across these brands paring back from 9 per cent in the first half to 4 per cent in the final six months.
It said it is aiming for GMV growth in 2024-25 and is on track for annual cost savings of £125 million.
Chief executive John Lyttle said: “Despite difficult market conditions, caused by high levels of inflation and weakened consumer demand, we made continued progress in the year.
“The group is now well positioned to return to growth, and we are focused on ensuring that growth is both sustainable and profitable.”
The results showed the impact of a tough trading backdrop, with active customer numbers down 11 per cent to 16 million, while average order values also fell 3 per cent and average order frequency per year dropped 9 per cent.
Spending among its customer base has been hit by the cost-of-living crisis, while it has also faced pressure from online rivals such as Shein.
The figures follow further allegations over its manufacturing practices, with a BBC Panorama investigation earlier this year revealing Boohoo mislabelled items of clothing made in South Asia as “made in the UK” at the city factory.
It found the company removed the original labels on T-shirts and hoodies at the retailer’s factory in Thurmaston Lane between January and October last year. Boohoo said at the time that it was an “isolated incident” and a result of “human error” and impacted less than 1 per cent of clothing supply.
The group revealed plans in January to close its Leicester factory and relocate operations, although it said this was not connected with the probe.
About three years previously, the company overhauled its ethical practices after a supply chain scandal and allegations over factory staff pay and working conditions.
Guy Lawson-Johns, equity analyst at Hargreaves Lansdown, said: “For now, it remains a struggling company with a tarnished reputation, reflected in the group’s valuation, which has come down significantly over the last few years.”
He added: “And with customer key performance indicators continuing to trend in the wrong direction, it doesn’t look like a miraculous recovery is around the corner.”
The factory in Rushey Mead opened two years ago. Of its closure plans, a spokesperson for Boohoo group told the Mercury last year: “We opened Thurmaston Lane in January 2022 to support the group in several ways, including manufacturing, printing and training.
“As in any retail business, the role of our sites continues to evolve over time and following significant investments at our Sheffield distribution centre and the opening of new distribution centre in the USA, we must now take steps to continue to ensure we are a more efficient, productive and strengthened business.
“All these factors have led us to make the difficult decision to consider relocating some of the operations at Thurmaston Lane and consider the closure of the site.”
It remains a struggling company with a tarnished reputation, reflected in the group’s valuation
Analyst Guy LawsonJohns