Boohoo revenues tumble as UK and US businesses suffer

Boohoo, an online fashion company has confirmed that sales dropped significantly in the fourth quarter of 2022 due to US and UK business losses.

According to the company, revenue fell by 11pc compared with the same period one year ago.

As the delivery times for the company were getting longer, the slowdown in the international market was caused.

(1) CER designates Constant Exchange Rate translation of foreign currency revenue. (2) ROE is rest of Europe. (3) ROW is rest of world.

boohoo group plc – trading statement for the four months to 31 December 2022

Financial and operational highlights

· In line with previous guidance, group revenue declined 11%. UK revenues declined 11% year on year, versus a strong prior year comparative. International revenues declined 10% year on year, with extended delivery times compared to pre-pandemic levels continuing to affect the proposition

· Gross margin for the period of 49.7% is broadly in line with expectations, and expected to improve year on year in P4 with a reduction in markdown activity anticipated compared to the same period last year

· Inventory continues to be tightly controlled, with improving speed and flexibility within our global supply base and inventory significantly reduced, down 27% year on year

·   Improvements in cash generation through tighter inventory management, cost control and an improved working capital cycle

· Significant liquidity headroom with more than £300 million of gross cash at the end of December, with net debt expected to be less than 1x Adjusted EBITDA at the end of the financial year

·   Successful launch of automation in the Group’s distribution centre in Sheffield, with improvements to efficiency ramping up over the coming months in line with expectations

·   Progress continues to be made with our US distribution centre, driving a step change in our customer proposition, expected to launch with a phased approach over 2023 and early 2024

·   Overheads continue to be managed tightly against a challenging economic backdrop, including a reduction in capacity in the UK distribution network, with action across the Group focusing on reducing costs.

Guidance and outlook

For the year ending 28 February 2023, adjusted EBITDA is expected to be in line with market expectations. Revenues are expected to decline approximately 12% over the financial year, with an adjusted EBITDA margin of approximately 3.5%.

With recent positive signs in global supply chains, we expect to see some easing of disruption along with some relief to freight rates. Combined with the actions being undertaken on costs across the Group, it is expected that overall cost growth begins to moderate as the year progresses along with an improved cost inflation outlook exiting the year ahead. The Group’s focus continues to be on optimising its operations and investing selectively in key strategic projects that best position it to rebound strongly as conditions normalise.

John Lyttle, CEO, commented:

“Performance in the period is in line with expectations and reflects the normalisation of the channel shift online over the last twelve months, but demonstrates the significant market share gains the Group has made over the last three years. Looking ahead, whilst the demand outlook is uncertain due to macro-economic factors, cost inflation is expected to begin to moderate in the second half of the year.

We have reduced inventory by 27% year on year and with this focus on careful inventory management, strong cost control and cash management, we will continue to drive operational and cost efficiency across the business. The Group has continued to invest in key strategic priorities that will enable future growth, and the progress made gives us confidence that as macro-economic headwinds ease it will be well-positioned to rebound strongly.”

Notice of full-year results

The Group intends to publish its Full Year results for the 12 months ended 28 February 2023 in May 2023.