Boohoo is to focus this year on optimising its operations, with increasing flexibility in its supply chain and strategic initiatives around warehousing.
Summarising its full-year 2022 results this week, the company said that although revenues were up 14% versus last year growth had been impacted by returns rates increasing significantly in the second half of the year.
In the UK return rates have increased back to pre-pandemic levels, being 9.8%pts above the prior year at 33.7%, the company said. It claimed this was partly attributable to the change in the product mix from more casual items to occasion wear and to the introduction of the newer, higher price point brands, which all have higher return rates. For the rest of Europe return rates were only marginally higher than in the prior year. Growth was also hit internationally as a result of extended delivery times.
Two new distribution centres have opened in the last year in Daventry and Wellingborough. The company said plans are on track for the automation of its Sheffield warehouse which is due to be completed in September this year. Capital expenditure on these facilities has amounted to £120.3 million. Boohoo is also opening a new distribution centre in the USA in FY2024 which it says will transform its delivery proposition and support its next phase of growth.
Boohoo said it would target increased sourcing from near-shore markets to reduce lead times and exposure to fluctuating inbound freight costs. It is also operating with lower levels of inventory through tighter stock management and increased levels of open to buy which the company said would give greater flexibility to react to changes in demand mid-season.
Whilst returns rates are expected to remain around current levels during FY2023, the group will annualise material increases in return rates in the first half of the new financial year.