Boohoo warns of sales slump as shoppers return to the high street

Demand for fast-fashion online retailer hit after lockdowns end and buyers shun ecommerce

BOOHOO has been dealt a blow by shoppers’ return to Britain’s high streets, as it became the latest online retailer to warn of dwindling demand.

The fast-fashion company said it expected sales to slump by about 12pc for the year to the end of February as customers flocked back to city centres following the lifting of Covid restrictions rather than buying online.

The company, along with online retailers Asos and Amazon, experienced a spike in demand during the pandemic when shops were forced to close, but has since struggled as customers head back into bricks-and-mortar stores.

Revenues were down 11pc in the four months to Dec 31. It comes months after Boohoo cut forecasts for the full year, to the end of September, warning that more people were returning orders in light of cost of living pressures.

Boohoo, which owns Prettylittlething, said sales had also been hit by the slower delivery times, with orders taking longer to reach customers than before the pandemic.

Boohoo partner Evri recently apologised to UK customers for the delay to Christmas deliveries, but said last week that it was still facing the fallout from staff shortages, bad weather and Royal Mail strikes.

Recent figures suggest that 2022 was the worst on record for online retailers. The IMRG Online Retail Index said online retail sales were down 10.5pc in 2022, “by far the lowest growth ever recorded for a year”. Online clothes sales fell 6.1pc in December compared to a year earlier, while online health and beauty sales dropped 12pc in the month.

Even larger online retailers such as Amazon have been hit by shoppers cutting back on their online spend. While traditional retailer Next has seen its share price jump by more than 45pc in recent months, Amazon shares are down more than a fifth since the end of November and it recently kicked off its biggest ever round of job cuts. Earlier this month, Amazon said it would be shutting three UK warehouses and seven delivery sites in a move which puts more than 1,300 jobs at risk.

Boohoo has also been making job cuts, and this month said it was consulting on cutting 100 roles in its London head office. Yesterday, Boohoo said it was uncertain how demand would hold up over the coming weeks amid pressures on consumers, but that it was expecting cost inflation to begin to moderate in the second half of the year.

The company has in the past faced steep freight costs, but has been working to be sourcing more from nearby countries, rather than Asia. It has also started charging customers £1.99 for returns – a move it said was down to the rising cost of shipping.

In an attempt to cut back further, Boohoo said it had also moved to stock less, with inventory levels down 27pc compared to last year. It said it had cut back capacity in its UK distribution operations as part of efforts to manage overheads “tightly against a challenging economic backdrop”.

Shares in Boohoo slumped 9.4pc on its latest update, worsening a rout which has seen share dive by almost 60pc since last January.