Despite profit warning Boohoo believes sales slump is ‘just a phase’

BOOHOO’S chief executive has insisted that the turmoil at the fast-fashion company was simply a “phase” despite sounding the alarm on sales and profits.

The online retailer, which also owns Prettylittlething and Karen Millen, plunged to a £15.2m pre-tax loss in the six months to Aug 31, compared with a £24.6m profit last year.

Sales fell by 10pc to £882m during the period as young shoppers cut back on spending. It now expects annual revenues to fall by a tenth, compared with earlier expectations that they would grow by about 2pc.

Boohoo blamed the performance on a significant increase in returns, supply chain woes, the deterioration in the economy and consumer confidence.

Shares in the company slumped to their lowest level since 2016 following the sales warning, but later recovered to close up 8pc yesterday.

John Lyttle, the chief executive, said he was “very confident about the longterm outlook” despite the recent poor performance. “Boohoo is very strong, [founders] the Kamani family and Carol [Kane] still own a high percentage of the business, we’re going through a phase,” he said. “We can’t think about today, we have a plan and we’re investing strategically for the future.”

Many investors take a different view, with Boohoo the most shorted stock on the London market. Disclosed short positions in the fashion retailer reached an all-time high of 9.95pc last week, according to data from Short-tracker.

The stock has lost 42pc of its value since its debut on the London market eight years ago, with the company now worth £500m compared with its June 2020 high of more than £5bn. Mr Lyttle said the company had a “strong balance sheet” with £315m of gross cash and low net debt of £10m.

Darcey Jupp, a retail analyst at Globaldata, said: “Despite building its reputation on low-cost, value apparel, Boohoo has proven it is not immune to the cost of living crisis.”