Boohoo Group today reports an 8% fall in first quarter sales and higher levels of returns as shopping gets back to pre-pandemic patterns
The fast fashion group today reports group revenue of £445.7m in the three months to May 31. That’s 8% down on the same time last year. Sales fell in the UK (-1% to £272.1m), rest of Europe (-7% to £49.6m) and the US (-26% to £95m) but grew in the rest of the world (+15% to £29m).
Boohoo says the first quarter sales decline reflects the comparison with a strong sales period last year, when the UK was in the third Covid-19 lockdown for some of the period. Net sales, it says, were hit as the level of returns went back to more normal levels, reflecting the type of products that shoppers bought. Before that, gross demand grew by 9% on last year. It also says that UK sales – net of returns – returned to growth in the final month of the quarter. International sales, meanwhile, are being affected by longer delivery times, although wholesale helped to drive growth in its rest of the world market and was also a factor in European sales.
Boohoo now expects revenues to return to growth in the second quarter of the year before improving in the second half of the year as consumer demand and higher returns rates get back to more normal levels. Over the course of the year it expects to report low single digit growth with profit margins of between 4% and 7%. It says it continues to manage its costs tightly “despite the significantly inflationary backdrop”, and that it is making its marketing more efficient.
Boohoo chief executive John Lyttle says: “I am pleased with the progress we are making towards our strategic priorities, which is already having a meaningful impact operationally within the business. We have seen promising signs from the group’s sales performance in the UK, which has improved month-on-month in the period and we are looking ahead towards our key summer trading season as holidays ramp up and customers look to the latest fashion from across our brands. Looking forward, we will continue to focus on optimising both our financial and operational performance to ensure the business is well placed to take advantage of future growth opportunities.”
Turnover for the quarter was 75% ahead of pre-pandemic 2019 following three years in which the Manchester-based group has bought brands including Warehouse, Oasis, Debenhams, Dorothy Perkins, Wallis and Burton.
Supply chain strategy
Boohoo has increased the amount of products that it sources from more local markets in order to reduce its inbound freight costs. It says it has controlled inventory more tightly and has improved supply chain flexibility.
