Fast fashion group Boohoo has warned that full-year profits and sales will be lower than expected after being hit by more customers returning clothes, delivery disruptions and rising costs.
Shares of the online clothing retailer plunged 15% in response to its second warning in four months, despite insisting that the current difficulties facing the business are mostly related to the pandemic and therefore “transient in nature”.
Boho said that while overall demand has grown since the first and second quarters, it is suffering from the effects of global shipping delays, higher costs associated with the pandemic, and “exceptionally high” levels of revenue associated with increased sales of dresses that have forced the group to cut its full-year forecast for sales growth to 12- Only 14%.
It was down from previous guidance with sales growth of 20-25% in the year ending Feb. 28. The group said that profit margins will also be affected by rates of return and will be lower than expected for sales abroad.
“This reflects our expectation that the factors affecting our performance in the period will continue through the remainder of the fiscal year, and recent developments surrounding the Omicron variable could pose further uncertainty about demand and higher rates of return especially in January and February,” Boho said in a statement. Thursday.
In the UK, Boohoo said net sales were up 32% in the three months to November, compared to a year earlier, reflecting “exceptional” domestic demand. However, returned items are up 12.5% year over year, and 7% higher than they were before the pandemic, mainly due to selling more dresses, which are more convenient than comfortable clothes popular during the first year of the pandemic, thus Customers become more. You will likely buy several sizes and send some back.
The company’s acquisition of brands including Coast and Karen Millen, which sell higher-priced dresses, increased the impact of these shopping styles. This trend is likely to continue into December, as Christmas and year-end parties are canceled due to the spread of the Omicron variant.
Boohoo — which also owns the Debenhams, Burton, Wallis and Dorothy Perkins brands — is among a handful of retailers struggling during the pandemic due to global shipping delays. Some ships failed to dock at ports due to local shutdowns or staff shortages, which had a ripple effect that affected deliveries internationally.
However, the UK fast fashion group’s business was partially shielded from these influences, due to local warehousing in warehouses which made shipping clothes to British consumers faster.
“The group has gained significant market share during the pandemic. The current headwinds are short-lived and we expect them to decline when the disruption associated with the pandemic begins to ease,” said Boohoo CEO John Little.
“Looking ahead, we are encouraged by the strong performance in the UK, which clearly underscores the Boohoo model,” he added. “Our focus is now on improving international offerings through continued investment in our global distribution network.”
“With multiple earnings warnings across the retail industry in recent weeks, the factors behind Boohoo’s warning are not surprising, but the magnitude of the slowdown and the hit [profit] Margin, given the confidence the company had three months ago.”
She said the problems were likely to persist beyond February because shipping capacity had not recovered as quickly as hoped and it could take at least a year for Boohoo’s US and European distribution centers, which would reduce the need for shipping from the UK. Put the finishing touches.