Boohoo lives up to its name
The former favourite has gone out of fashion. Alex Rankine reports
Online fast-fashion retailer Boohoo has left “investors in tears”, says Oscar Williams-Grut in the Evening Standard. It has issued its second profit warning in a matter of months, saying that net sales growth in the year to the end of February will come in at 12%-14%, lower than previous guidance of 20%-25%. While net sales rose by 32% in the UK in the three months to 30 November, they fell by 12% in the rest of Europe and 14% in the US owing to longer delivery times. The stock was once an investors’ favourite. But stretched supply chains and rampant inflation are proving “deadly”. Since the start of the year the shares have fallen by two-thirds to a five-year low.
Not-so-fast fashion
Boohoo’s problem is that it is “trying to sell into the US out of warehouses in Sheffield and Burnley”, says Nils Pratley in The Guardian. Global supply chains are buckling and picky US customers won’t wait ten days for a dress to be delivered (Boohoo plans to open a US distribution centre in 2023). Boohoo is also struggling with a rise in returns. Online fast-fashion sellers may have done well in the first lockdown when people bought shapeless “athleisure” wear, but now they want something more presentable. Ill-fitting dresses are being returned in droves. “Rival Primark’s blanket refusal to join the online game looks smarter by the month.”
Boohoo says that its supply-chain woes are “transient”, but it faces more permanent threats too, says Ben Marlow in The Daily Telegraph. Chinese fashion giant Shein, said to be valued at £23bn (compared to Boohoo’s £1.5bn), is taking the fashion market by storm. It has pioneered “ultra-fast” fashion, which sees internet trends turned into new products in factories in a matter of days. Shein is thought to have “already captured a quarter of the American market”. While Western brands come under intense pressure to improve their environmental records and factory working conditions, Shein seems immune to such concerns, creating “an uneven playing field”. Fashion shoppers may not care: Boohoo had its own sweatshop scandal last year, which was followed by “record trading”.