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Boohoo sees spike in returns amid international supply chain disruptions

Image courtesy of Boohoo

Boohoo Group says the number of customers returning unwanted goods has increased over the past three months.

This is expected to continue until the first half of the financial year 2023.

The pureplay has also grappled with supply chain disruptions caused by the pandemic, meaning customers have had to wait longer for their deliveries – especially those shopping overseas.

Despite these setbacks, Boohoo Group announced in a fourth quarter trading update today that net sales growth increased by 14% over the year to the end of February, while sales were up 7% in the fourth quarter alone. This reached the retailer’s expectations which were set out in December (12% to 14%) and factored in the “ongoing pandemic-related inbound freight cost inflation.”

The RXUK Top500 retailer also added that gross sales growth was strong at 26% year-on-year and 57% higher than two years ago.

It is forecast that the retailer giant will make profits of approximately £125 million for the 12 months to February 28, 2022 – again, taking into account the negative impact of “significantly higher returns rates” on sales.

Boohoo Group chief executive officer John Lyttle says: “The group has delivered strong growth over the last two years, which has translated into significant market share gains. We are confident that pandemic-related headwinds are short-term in their nature, and our focus is to ensure the business is well positioned for growth as these headwinds ease.”

This news comes just days after Sir Brian Leveson’s final report on Boohoo Group’s progress, after the fashion retailer was accused in the summer of 2020 of “inadequate” working conditions in its supply chain.

In the report, published on Tuesday, Sir Brian highlighted that “challenges and difficulties” remain across the fashion retailer’s supply chain.

However, it was acknowledged that positive change is being implemented by Boohoo, including responsible purchasing practices, sustainability, and ethical compliance, as well as modern slavery training programmes.

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